The Bank Lobbyists Behind the Senators Voting "No" on Reconciliation

May 24, 2010

Kevin Connor

Co-founder, Public Accountability Initiative
Posted: March 24, 2010 04:06 PM

The Bank Lobbyists Behind the Senators Voting "No" on Reconciliation

As the Senate takes up health care under the reconciliation process, the fight to block reform continues -- for the banks and their minions in the Senate, at least.

The health care fix-it bill approved by the House on Sunday night includes student loan reform legislation that would end wasteful subsidies to lenders like Sallie Mae, Citigroup, and JP Morgan. The banks are extraneous middlemen in the student loan business, skimming profits by originating government-backed loans and charging high interest rates. The reconciliation bill would eliminate the program that subsidizes these activities and switch to a more efficient and equitable system of direct lending.

Despite the common-sense nature of the reform, Senators Blanche Lincoln and Ben Nelson have decided that they will vote no on the reconciliation bill due to the inclusion of student loan reform legislation. Two weeks ago, they were part of a coalition of six Democratic Senators -- including Mark Warner, Tom Carper, Bill Nelson, and Jim Webb -- that wrote a letter to Senate majority leader Harry Reid raising concerns about the student reform legislation.

Why would these Senators step forward to defend a wasteful, inefficient system that pads bank profits at the expense of college students?

That's the question I attempted to answer in a report released on Tuesday by the Campaign for America's Future, titled "Money-Changers in the Senate: How the Student Loan Industry Enlisted Senators to Fight Reform and Protect Profits."

The report estimates that the industry has spent $15 million fighting the Student Aid and Fiscal Responsibility Act (SAFRA). It details how the banks have mounted a massive political campaign to fight legislative reform and preserve the status quo: billions in profits, company jets, private golf courses -- and predatory interest rates for America's college students.

As part of the campaign, the industry developed a sophisticated political strategy that targeted potential sympathizers in the Senate, including the six Senators who signed the letter to Reid. The industry showered them with campaign contributions and made a number of key lobbying hires in order to open lines of communication with their offices.

Among their hires: Kelly Bingel. Bingel is Senator Blanche Lincoln's former chief of staff and a longtime aide to the Senator. She is lobbying on behalf of an obscure group called the "Student Loan Coalition" and John Dean, a lobbyist for the Consumer Bankers Association. The CBA's membership includes Citigroup, Chase, Wells Fargo, and a number of other large student lenders.

A recent Roll Call article described Bingel as Lincoln's "alter ego."

Student loan lobbyist Kelly Bingel and Sen Blanche Lincoln.

Their ties also extend beyond the professional sphere: Lincoln is the godmother of Bingel's son, according to this interview Bingel gave to her old sorority. Ironically, considering the matter at hand, Senator and lobbyist were brought together by their college ties. Lincoln and Bingel were both members of the same sorority, Chi Omega (at different schools, however).

Lobbyists like Bingel have used their relationships with their old bosses to ensure that the Senate looks out for the student loan industry's agenda, even if it comes at the expense of millions of students.

The industry's other key Democratic defender, Senator Ben Nelson, also has strong ties to the industry through his former legislative director, Amy Tejral. Tejral lobbies for Nelnet, a major lender based in Nelson's home state of Nebraska.

Amy Tejral - Ben Nelson(2)

Student loan lobbyist Amy Tejral and Sen Ben Nelson.

At least six student loan lobbyists once worked for the six Senators who rose to the defense of the student loan industry in the letter to Reid.

The report also notes that the industry has used a number of industry associations and shadow groups to fight reform. The Consumer Bankers Association, the Business Roundtable, the American Bankers Association, and the Chamber of Commerce have all lobbied against student loan reform. The groups enlisted lobbyists on behalf of their members, which include Sallie Mae, JP Morgan, Citigroup, and other major lenders.

Even Chamber CEO Tom Donohue got in the act, personally lobbying against SAFRA, according to the business lobby's disclosure reports.

The industry has also funneled tens of thousands of dollars to these Senators. Nelson, for one, is a top recipient of Nelnet cash. The company's PAC has given him $19,000 over the years, and executives Jay and Mike Dunlap gave him $3,000 late last year. Sallie Mae's PAC maxed out to Senator Blanche Lincoln's primary account in 2009. Two of Tom Carper's top three career contributors are JP Morgan and Citigroup, both major lenders, and Sallie Mae's PAC has given him $13,500 over the past ten years.

To get an idea of the firepower behind the industry's campaign, check out the full report.

In a hopeful sign for American college students, the original coalition of Senators that rallied around the student loan industry now appears to be splintering. Ben Nelson and Blanche Lincoln have announced that they will vote no on reconciliation, but Tom Carper, Bill Nelson, and Jim Webb appear to be signaling that they will support the legislation. Mark Warner's stance is still unknown.

When the Democrats first re-gained the Senate majority in 2006, the late Senator Ted Kennedy made student loan reform a major legislative goal, saying that "it's time to throw the money-changers out of the temple of higher education." Despite the student lenders' multi-million dollar campaign to preserve the status quo -- billions in bank profits while college students get stuck with the bill -- the Senate may finally stand up and give the money-changers the boot.

Kevin Connor is a fellow at the Institute for America's Future. A version of this post first appeared at OurFuture.org.

http://www.huffingtonpost.com/kevin-connor/the-bank-lobbyists-behind_b_512049.html

Senate Votes For Wall Street; Megabanks To Remain Behemoths

Ryan Grim and Shahien Nasiripour
The Huffington Post

A move to break up major Wall Street banks failed Thursday night by a vote of 61 to 33.

Three Republicans, Richard Shelby of Alabama, Tom Coburn of Oklahoma and John Ensign of Nevada, voted with 30 Democrats, including Senate Majority Leader Harry Reid of Nevada, in support of the provision. The author of the pending overall financial reform bill in the Senate, Banking Committee Chairman Christopher Dodd, voted against it. (See the full roll call.)

The amendment, sponsored by Sens. Sherrod Brown (D-Ohio) and Ted Kaufman (D-Del.), would have required megabanks to be broken down in size and capped so that their individual failure would not bring down the entire system.

Under Brown-Kaufman, no bank could hold more than 10 percent of the total amount of insured deposits, and a limit would have been placed on liabilities of a single bank to two percent of GDP.

In practice, the amendment required the six biggest banks -- Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley -- to significantly scale down their size. It was touted as a way to end Too Big To Fail.

Though top Obama administration officials have not publicly opposed the amendment, its leading economists have opposed ending Too Big To Fail simply by breaking up the nation's financial behemoths. Austan Goolsbee and Larry Summers have both fought back against this idea, as has Treasury Secretary Timothy Geithner.

"This is certainly a defeat for those who are concerned about the dangers of financial concentration in this country," Kaufman said in a statement after the vote. "Some causes are worth fighting for, and for me, the concern about the risks 'too big to fail' banks pose to the American economy and people is deep and profound given the economic tragedy millions of American have endured. I believe the debate itself -- though failing to gain a majority of votes -- has helped to change attitudes about the degree of financial concentration and power these megabanks now represent."
Story continues below

The banks owned by the four largest financial firms in the U.S. collectively account for about 45 percent of all assets in the U.S. banking system, according to a HuffPost analysis of Federal Deposit Insurance Corporation data.

Those four megabanks collectively hold about $7.4 trillion in assets, according to the most recent regulatory filings with the Federal Reserve. That's equal to about 52 percent of the nation's estimated total output last year.

The top 12 banks in the U.S. control half the country's deposits. By comparison, it took 25 banks to accomplish this feat in 2003 and 42 banks in 1998, according to a Jan. 4 research note by Jason M. Goldberg of Barclays Capital.

There are 23 bank-holding companies in the U.S. with more than $100 billion in assets, according to Federal Reserve data.

Richard W. Fisher, president and chief executive of the Federal Reserve Bank of Dallas, is among a group of at least three current regional Fed presidents that have called for the nation's megabanks to be broken up, joining Kansas City Fed president Thomas M. Hoenig and St. Louis Fed president James Bullard.

Fisher has suggested a ceiling on bank assets placed at $100 billion.

"In the past two decades, the biggest banks have grown significantly bigger," Fisher said last month. "The average size of U.S. banks relative to gross domestic product has risen threefold. The share of industry assets for the 10 largest banks climbed from almost 25 percent in 1990 to almost 60 percent in 2009."

Of course, size is not the only danger -- Lehman Brothers, whose crash rocked the financial system, would have been under the size caps proposed by the amendment. To that end, the Brown-Kaufman amendment limited the amount of leverage an institution can take at about 16-to-1. Hoenig has suggested a 15-to-1 ratio. Leverage is the use of debt to increase assets without a corresponding increase in capital.

The amendment began as a wild longshot, backed by the junior senator from Ohio, Brown, and a longtime aide to Joe Biden, Kaufman, appointed to keep his seat warm for two years until the 2010 election. That the amendment gained as much support as it did is an indication of the depth of the populist anger.

Sen. Mark Warner (D-Va.) and Dodd of Connecticut spoke against the amendment.

Sen. Judd Gregg (R-N.H.) was indignant. "I don't understand this Brown-Kaufman amendment. Basically, what it says is if you're successful...you're going to break them up? I mean, where does this stop? Do we take McDonald's on?"

"It really doesn't make any sense to me," he said.

After the vote, Kaufman defended the provision.

"I believe this idea was sound policy -- and I further believe that a mainstream consensus will continue to grow that these megabanks are too large, too complex and too internally conflicted to regulate successfully," he said, echoing a position voiced by regional Fed presidents, former top Fed officials, and former top bankers on Wall Street.

The Senate will resume voting on amendments to the legislation next week.


The 27 Democrats who voted against the amendment:

* Akaka (D-HI)
* Baucus (D-MT)
* Bayh (D-IN)
* Bennet (D-CO)
* Carper (D-DE)
* Conrad (D-ND)
* Dodd (D-CT)
* Feinstein (D-CA)
* Gillibrand (D-NY)
* Hagan (D-NC)
* Inouye (D-HI)
* Johnson (D-SD)
* Kerry (D-MA)
* Klobuchar (D-MN)
* Kohl (D-WI)
* Landrieu (D-LA)
* Lautenberg (D-NJ)
* McCaskill (D-MO)
* Menendez (D-NJ)
* Nelson (D-FL)
* Nelson (D-NE)
* Reed (D-RI)
* Schumer (D-NY)
* Shaheen (D-NH)
* Tester (D-MT)
* Udall (D-CO)
* Warner (D-VA)

http://www.huffingtonpost.com/2010/05/06/senate-votes-for-wall-str_n_567063.html

Levin releases email showing Goldman Sachs fraud.

http://levin.senate.gov/newsroom/release.cfm?id=324169

FOR IMMEDIATE RELEASE April 24, 2010	Contact: Senator Levin's Office Phone: 202.224.6221
Senate Subcommittee Investigating Financial Crisis Releases Documents on Role of Investment Banks
WASHINGTON – The Senate Permanent Subcommittee on Investigations released several exhibits that will be among those discussed on Tuesday at the fourth of its hearings on the causes and consequences of the financial crisis. The exhibits are available at this link. Using Goldman Sachs as a case study, the April 27 hearing will focus on the role of investment banks in contributing to the worst U.S. economic crisis since the 1930s, resulting in the foreclosure of millions of homes, the shuttering of businesses, and the loss of millions of American jobs. The Subcommittee, whose Chairman is Sen. Carl Levin, D-Mich., and whose Ranking Republican is Sen. Tom Coburn, R-Okla., has conducted a nearly year and a half investigation into the 2008 financial crisis. “Investment banks such as Goldman Sachs were not simply market-makers, they were self-interested promoters of risky and complicated financial schemes that helped trigger the crisis,” said Sen. Levin. “They bundled toxic mortgages into complex financial instruments, got the credit rating agencies to label them as AAA securities, and sold them to investors, magnifying and spreading risk throughout the financial system, and all too often betting against the instruments they sold and profiting at the expense of their clients.” The 2009 Goldman Sachs annual report stated that the firm “did not generate enormous net revenues by betting against residential related products.” Levin said, “These e-mails show that, in fact, Goldman made a lot of money by betting against the mortgage market.” The four exhibits released today are Goldman Sachs internal e-mails that address practices involving residential mortgage-backed securities and collateralized debt obligations (CDOs), financial instruments that were key in the financial crisis. Goldman Sachs Chairman and Chief Executive Officer Lloyd Blankfein and other current and former company personnel are scheduled to testify at Tuesday's hearing. In one of the e-mails released today, Mr. Blankfein stated that the firm came out ahead in the mortgage crisis by taking short positions. In an e-mail exchange with other top Goldman Sachs executives, Mr. Blankfein wrote: “Of course we didn't dodge the mortgage mess. We lost money, then made more than we lost because of shorts.” In a second e-mail, Goldman Sachs Chief Financial Officer David Viniar, who also will testify on Tuesday, responded to a report on the firm's trading activities, showing that – in one day - the firm netted over $50 million by taking short positions that increased in valued as the mortgage market cratered. Mr. Viniar wrote: “Tells you what might be happening to people who don't have the big short.” Levin said: “There it is, in their own words: Goldman Sachs taking ‘the big short’ against the mortgage market.” In a third e-mail, Goldman employees discussed the ups and downs of securities that were underwritten and sold by Goldman and tied to mortgages issued by Washington Mutual Bank's subprime lender, Long Beach Mortgage Company. Reporting the “wipeout” of one Long Beach security and the “imminent” collapse of another as “bad news” that would cost the firm $2.5 million, a Goldman Sachs employee then reported the “good news” – that the failure would bring the firm $5 million from a bet it had placed against the very securities it had assembled and sold. In a fourth e-mail, a Goldman Sachs manager reacted to news that the credit rating agencies had downgraded $32 billion in mortgage related securities – causing losses for many investors – by noting that Goldman had bet against them: “Sounds like we will make some serious money.” His colleague responded: “Yes we are well positioned.” Prior hearings of the Subcommittee have looked at how high risk lending strategies, bank regulatory failures, and inflated credit ratings contributed to the financial crisis. Next Tuesday’s hearing examining the role of investment banks will be the final hearing in the quartet of hearings on “Wall Street and the Financial Crisis.” The hearing will begin at 10:00 a.m. in room 106 of the Dirksen Senate Office Building.

Inside Job - a well-told story of the big financial sharks.

This American Life tells another part of the story of the sharks betting against the American Dream.

http://www.thisamericanlife.org/radio-archives/episode/405/inside-job

New Senate report on says Treasury programs are not resolving the mortgage forclosure crisis.

http://cop.senate.gov/press/releases/release-041410-aprilforeclosure.cfm

Panel Applauds Recent HAMP Revisions, But Treasury's Programs Are Not Keeping Pace with the Foreclosure Crisis

WASHINGTON, D.C. - The Congressional Oversight Panel today released its April oversight report, "Evaluating Progress of TARP Foreclosure Mitigation Programs." The Panel commended recent changes to the mortgage modification program designed to reach more homeowners, but found that Treasury is still struggling to get its foreclosure programs off the ground even as the crisis continues unabated.

Since the Panel's last examination of foreclosure mitigation efforts in October 2009, Treasury has taken steps to address concerns that the Home Affordable Modification Program (HAMP) did not adequately address foreclosures caused by unemployment or negative equity, including by establishing a voluntary principal reduction program. Despite these and other efforts, foreclosures continue at a rapid pace. In 2009, 2.8 million homeowners received a foreclosure notice, and nearly one in four homeowners with a mortgage currently has negative equity. While housing prices have begun to stabilize in many regions, home values in several metropolitan areas continue to fall sharply.

The Panel found that "Treasury's response continues to lag well behind the pace of the crisis" and that, even when HAMP is fully operational, they "will not reach the overwhelming majority of homeowners in trouble." The report raises three specific concerns with Treasury's foreclosure programs:

Timeliness. Since early 2009, Treasury has initiated half a dozen foreclosure mitigation programs, gradually ramping up the incentives for participation by borrowers, lenders, and servicers. Although Treasury should be commended for trying new approaches, its pattern of providing ever more generous incentives might backfire, as lenders and servicers might opt to delay modifications in hopes of eventually receiving a better deal.

Sustainability. Although HAMP modifications reduce a homeowner's mortgage payments, many borrowers continue to experience severe financial strain. HAMP typically does not reduce the total principal balance of a mortgage, meaning that a borrower who was underwater before receiving a HAMP modification will likely remain underwater afterward. Many borrowers will eventually redefault and face foreclosure. Redefaults signal the worst form of failure of the HAMP program: billions of taxpayer dollars will have been spent to delay rather than prevent foreclosures.

Accountability. The Panel is concerned that the sum total of announced funding for Treasury's individual foreclosure programs exceeds the total amount set aside for foreclosure prevention. Treasury must be clearer about how much taxpayer money it intends to spend. Additionally, it must thoroughly monitor the activities of participating lenders and servicers, audit them, and enforce program rules with strong penalties for failure to follow the requirements.

The full report is available at cop.senate.gov.

The Congressional Oversight Panel was created to oversee the expenditure of the Troubled Asset Relief Program (TARP) funds authorized by Congress in the Emergency Economic Stabilization Act of 2008 (EESA) and to provide recommendations on regulatory reform. The Panel members are: former Securities and Exchange Commissioner Paul S. Atkins; J. Mark McWatters; Richard H. Neiman, Superintendent of Banks for the State of New York; Damon Silvers, Policy Director and Special Counsel for the AFL-CIO; and Elizabeth Warren, Leo Gottlieb Professor of Law at Harvard Law School.

The Up-or-Down Vote on Obama’s Presidency

March 7, 2010

By FRANK RICH

WEDNESDAY’S health care rally was one of President Obama’s finest hours. It was so fine it couldn’t be blighted even by his preposterous backdrop, a cohort of white-jacketed medical workers large enough to staff a hospital in one of the daytime soaps that refused to be pre-empted by the White House show.

Obama’s urgent script didn’t need such cheesy theatrics. At last he took ownership of what he called “my proposal,” stating concisely three concrete ways the bill would improve America’s broken health care system. At last he pushed for a majority-rule, up-or-down vote in Congress. At last he conceded that bipartisan agreement between two parties with “honest and substantial differences” on fundamental principles wasn’t happening. At last he mobilized his rhetoric against a villain everyone could hiss — insurance companies. In a brief address, he mentioned these malefactors of great greed 13 times.

There was only one problem. This finest hour arrived hastily and tardily. At 1:45 p.m. Eastern time, who was watching? Of those who did watch or caught up later, how many bought the president’s vow to finish the job “in the next few weeks”? We’ve heard this too many times before. Last May Obama said he would have a bill by late July. In July he said he wanted it “done by the fall.” The White House’s new date for final House action — specified as March 18 by Robert Gibbs, the press secretary — is already in jeopardy.

“They are waiting for us to act,” Obama said on Wednesday of the American people. “They are waiting for us to lead.” Actually, they have given up waiting. Some 80 percent of the country believes that “nothing can be accomplished” in Washington, according to an Ipsos/McClatchy poll conducted a week ago. The percentage is just as high among Democrats, many of whom admire the president but have a sinking sense of disillusionment about his ability to exercise power.

Now that we have finally arrived at the do-or-die moment for Obama’s signature issue, we face the alarming prospect that his presidency could be toast if he doesn’t make good on a year’s worth of false starts. And it won’t even be the opposition’s fault. If too many Democrats in the House defect, health care will be dead. The G.O.P. would be able to argue this fall, not without reason, that the party holding the White House and both houses of Congress cannot govern.

For the sake of argument, let’s say that Obama does eke out his victory. Republicans claim that if he does so by “ramming through” the bill with the Congressional reconciliation process, they will have another winning issue for November. On this, they are wrong. Their problem is not just their own hypocritical record on reconciliation, which they embraced gladly to ram through the budget-busting Bush tax cuts. They’d also have to contend with this country’s congenitally short attention span. Once the health care fight is over and out of sight, it will be out of mind to most Americans. We’ve already forgotten about Afghanistan — until the next bloodbath.

The 2010 election will instead be fought about the economy, as most elections are, especially in a recession whose fallout remains severe. But that battle may be even tougher for this president and his party — and not just because of the unemployment numbers. The leadership shortfall we’ve witnessed during Obama’s yearlong health care march — typified by the missed deadlines, the foggy identification of his priorities, the sometimes abrupt shifts in political tone and strategy — won’t go away once the bill does. This weakness will remain unless and until the president himself corrects it.

Those who are unsympathetic or outright hostile to Obama frame his failures as an attempt to impose “socialism” on a conservative nation. The truth is that the Fox News right would believe this about any Democratic president no matter who he was and what his policies were. Obama, who has expanded the war in Afghanistan and proved reluctant to reverse extra-constitutional Bush-Cheney jurisprudence, is a radical mainly to those who believe a conservative Republican senator like Kay Bailey Hutchison of Texas is a closet commie.

The more serious debate about Obama is being conducted by neutral or sympathetic observers. There are many hypotheses. In Newsweek, Jon Meacham has written about an “inspiration gap.” He sees the professorial president as “sometimes seeming to be running the Brookings Institution, not the country.” In The New Yorker, Ken Auletta has raised the perils of Obama’s overexposure in our fractionalized media. (As if to prove the point, the president was scheduled to appear on Fox’s “America’s Most Wanted” to celebrate its 1,000th episode this weekend.) In the Beltway, the hottest conversations center on the competence of Obama’s team. Washington Post columnists are now dueling over whether Rahm Emanuel is an underutilized genius whose political savvy the president has foolishly ignored — or a bull in the capital china shop who should be replaced before he brings Obama down.

But the buck stops with the president, not his chief of staff. And if there’s one note that runs through many of the theories as to why Obama has disappointed in Year One, it cuts to the heart of what had been his major strength: his ability to communicate a compelling narrative. In the campaign, that narrative, of change and hope, was powerful — both about his own youth, biography and talent, and about a country that had gone wildly off track during the failed presidency of his predecessor. In governing, Obama has yet to find a theme that is remotely as arresting to the majority of Americans who still like him and are desperate for him to succeed.

The problem is not necessarily that Obama is trying to do too much, but that there is no consistent, clear message to unite all that he is trying to do. He has variously argued that health care reform is a moral imperative to protect the uninsured, a long-term fiscal fix for the American economy and an attempt to curb insurers’ abuses. It may be all of these, but between the multitude of motives and the blurriness (until now) of Obama’s own specific must-have provisions, the bill became a mash-up that baffled or defeated those Americans on his side and was easily caricatured as a big-government catastrophe by his adversaries.

Obama prides himself on not being ideological or partisan — of following, as he put it in his first prime-time presidential press conference, a “pragmatic agenda.” But pragmatism is about process, not principle. Pragmatism is hardly a rallying cry for a nation in this much distress, and it’s not a credible or attainable goal in a Washington as dysfunctional as the one Americans watch in real time on cable. Yes, the Bush administration was incompetent, but we need more than a brilliant mediator, manager or technocrat to move us beyond the wreckage it left behind. To galvanize the nation, Obama needs to articulate a substantive belief system that’s built from his bedrock convictions. His presidency cannot be about the cool equanimity and intellectual command of his management style.

That he hasn’t done so can be attributed to his ingrained distrust of appearing partisan or, worse, a knee-jerk “liberal.” That is admirable in intellectual theory, but without a powerful vision to knit together his vision of America’s future, he comes off as a doctrinaire Democrat anyway. His domestic policies, whether on climate change or health care or regulatory reform, are reduced to items on a standard liberal wish list. If F.D.R. or Reagan could distill, coin and convey a credo “nonideological” enough to serve as an umbrella for all their goals and to attract lasting majority coalitions of disparate American constituencies, so can this gifted president.

He cannot wait much longer. The rise in credit-card rates, as well as the drop in consumer confidence, home sales and bank lending, all foretell more suffering ahead for those who don’t work on Wall Street. But on these issues the president, too timid to confront the financial industry backers of his own campaign (or their tribunes in his own administration) and too fearful of sounding like a vulgar partisan populist, has taken to repeating his health care performance.

And so leadership on financial reform, as with health care, has been delegated to bipartisan Congressional negotiators poised to neuter it. The protracted debate that now seems imminent — over whether a consumer protection agency will be in the Fed or outside it — is again about the arcana of process and bureaucratic machinery, not substance. Since Obama offers no overarching narrative of what financial reform might really mean to Americans in their daily lives, Americans understandably assume the reforms will be too compromised or marginal to alter a system that leaves their incomes stagnant (at best) while bailed-out bankers return to partying like it’s 2007. Even an unimpeachable capitalist titan like Warren Buffett, venting in his annual letter to investors last month, sounds more fired up about unregulated derivatives and more outraged about unpunished finance-industry executives than the president does.

This time Obama doesn’t have a year to arrive at his finest hour. Not to put too fine a point on it, but the clock runs out on Nov. 2.

Copyright 2010 The New York Times Company

Poll: Mass. Voters Protested Against Weak Wall Street, Health Care Policies

First Posted: 01-20-10 11:07 AM | Updated: 01-20-10 05:16 PM

Sam Stein and Ryan Grim

Massachusetts voters who backed Barack Obama in the presidential election a year ago and either switched support to Republican Senate candidate Scott Brown or simply stayed home, said in a poll conducted after the election Tuesday night that if Democrats enact tougher policies on Wall Street, they'll be more likely to come back to the party in the next election.

A majority of Obama voters who switched to Brown said that "Democratic policies were doing more to help Wall Street than Main Street." A full 95 percent said the economy was important or very important when it came to deciding their vote.

In a somewhat paradoxical finding, a plurality of voters who switched to the Republican -- 37 percent -- said that Democrats were not being "hard enough" in challenging Republican policies.

It would be hard to find a clearer indication, it seems, that Tuesday's vote was cast in protest.

The poll also upends the conventional understanding of health care's role in the election. A plurality of people who switched -- 48 -- or didn't vote -- 43 -- said that they opposed the Senate health care bill. But the poll dug deeper and asked people why they opposed it. Among those Brown voters, 23 percent thought it went "too far" -- but 36 percent thought it didn't go far enough and 41 percent said they weren't sure why they opposed it.

Among voters who stayed home and opposed health care, a full 53 percent said they opposed the Senate bill because it didn't go far enough; 39 percent weren't sure and only eight percent thought it went too far.

The firm Research 2000 conducted the post-election survey Tuesday night on behalf of three progressive organizations -- the Progressive Change Campaign Committee, Democracy for America and MoveOn.org.

Taken from interviews of 500 Obama backers who voted in the Senate election and 500 Obama backers who sat out the election, the firm discovered that 18 percent of Obama backers who voted in the Senate race ended up casting ballots for Brown.

Of that group, 82 percent said they favored a public option for insurance coverage, with 14 percent opposed. Of those who sat out the election, 86 percent favored the public option, while only seven percent opposed it. The findings suggests that progressive arguments that disappointed Obama supporters deserted have serious merit.

UPDATE: With little, if any, historical precedent for the current situation in Congress, anything is possible on Capitol Hill over the next few weeks. Progressives have seized on the chaos and the polling numbers above to argue that the message voters sent was that Democrats haven't been bold enough. So far, more than 100,000 people have signed a petition calling for the Senate to put the public option back into the health care bill and pass it using the parliamentary maneuver known as reconciliation, which only requires 50 votes plus the vice president. Meanwhile, top Democrats are taking the idea seriously.

"Congressional Democrats have now been given fair warning by voters about what they expect in 2010: faster change, bolder change, and a willingness to fight big corporations on behalf of the little guy," said Adam Green, whose organization is leading the petition effort. "The Lieberman-Nelson strategy lost Ted Kennedy's Senate seat. Now it's time to push the public option through reconciliation -- and then, on to strong Wall Street accountability."

More details on the poll here and here.

Overview of the Health Care Reform Bill as of 20 Dec 2009.

http://www.dailykos.com/storyonly/2009/12/20/816923/-An-Overview-of-the-New-Senate-Health-Bill

Good articles.

ARRA keeping millions from poverty.
http://www.cbpp.org/cms/index.cfm?fa=view&id=3035

Republicans' manual for delaying health care reform.
http://www.dailykos.com/story/2009/12/2/810117/-GOP-Obstruction-Manual-for-HCR

House passed wall street reform on 11 Dec 2009.

It's not as big as the huge backward step when Clinton and the Republicans eliminated Glass Steagall and thus enabled the recent economic disaster, but it is a step forward.

Diane Rehm 14 December 2009
http://wamu.org/programs/dr/09/12/14.php#29178

Consumer Reports
http://blogs.consumerreports.org/money/2009/12/cfpa-financial-regulation-house.html

Q&A by the AP
http://www.google.com/hostednews/ap/article/ALeqM5i9UE4Ip_QNvHp43cXXo1HQzApRngD9CHDR3G0

Huffington Post 11 December 2009
http://www.huffingtonpost.com/2009/12/11/house-passes-financial-re_n_389267.html
First Posted: 12-11-09 04:30 PM | Updated: 12-11-09 08:32 PM

In a close vote, the House of Representatives Friday afternoon passed a financial reform bill intended to re-regulate Wall Street and increase protections for Main Street.

The bill, passed in a 223-202 vote, calls for the creation of a new federal agency dedicated to protecting consumers that would police consumer credit products like mortgages and credit cards. It also establishes new rules for the trading of derivatives and increases the transparency of the credit-rating process -- two previously under-regulated parts of the economy that played a large role in last year's economic collapse.

Not a single Republican voted for the bill. Twenty-seven Democrats broke with the rest of their party to vote against it.

The measure includes language, introduced in committee by Reps. Ron Paul (R-Texas) and Alan Grayson (D-Fla.), that would authorize an expansive audit of the Federal Reserve, a landmark achievement for critics of the central bank's secretive operations.

The bill also requires systemically important banks to pay into a fund that would be used to break them up and sell them off if they go bankrupt. Republicans bitterly and inaccurately referred to it as a "bailout fund," telegraphing a critique that will undoubtedly re-emerge during the 2010 midterm elections.

"Today is an important milestone in reversing the decades-long stranglehold Wall Street and big banks have had over our economy. But it is just the first step," said Service Employees International Union Secretary-Treasurer Anna Burger. "Despite the millions Wall Street and the Chamber of Commerce spent fighting the demands of the American people and the dozens of visits by big bank CEOs to strong-arm members of Congress, our leaders found the political will and courage to pass the most historic financial reform legislation in nearly 80 years."

The fight to fundamentally reform financial regulations began soon after President Barack Obama took office. Public zeal, though, was tempered on Capitol Hill by bankers and other Wall Street titans, who united to fight against the kind of reform advocated by consumers, union groups, and academics.

The bill disappointed some consumer groups, who pledged to work to make it stronger as it moves to the Senate.

"The bill does very little to address industry structure," the consumer advocacy group Public Citizen said in a statement. "The biggest banks are now bigger than they were before the crisis."

Michael Calhoun, president of the Center for Responsible Lending, hailed the bill's creation of the Consumer Financial Protection Agency, but worried it goes too far in allowing federal regulators to preempt their state compatriots.

"The bill would provide consumers with significant protections from the industry practices that dismantled our economy and those of countries around the world," he said. "We commend the House for this vote to protect families and small business from unfair, unsafe financial practices. However, we remain concerned that the bill allows the same federal banking regulators whose inaction led to the current crisis to continue to ignore state law. That must be fixed as the legislation moves forward."

Despite the advocacy by financial luminaries like former Federal Reserve Chairman Paul Volcker, the bill does nothing to break up big banks or address the mixing of commercial and investment banking by giant firms like JPMorgan Chase and Goldman Sachs.

Barbara Roper, director of investor protection at the Consumer Federation of America, praised the part of the bill dealing with credit rating agencies -- with a caveat, though.

"If you accept the whole business model as a given, the rest of it is strong," she said, referring to the fact that the agencies are paid by bond issuers to rate their products, creating an inherent conflict of interest.

Specifically, the bill subjects the credit rating agencies to increased liability, allowing for aggrieved investors to sue. Also, thanks to Rep. Brad Sherman (D-Calif.), a provision was added mandating that the agencies owe a duty of care to investors, rather than just to the bond issuers that pay them, she said.

The bill takes a stab at regulating derivatives, but key reforms were either ignored or voted down. An amendment by Bart Stupak (D-Mich.) calling for increased transparency in trading, which was backed by a coalition of pro-reform advocates, was voted down 330-98.

Financial Services Committee Chairman Barney Frank offered another amendment regarding derivatives that would have beefed up the powers of federal regulators, who have long lacked critical authority to initiate meaningful regulation. That, too, died.

A third amendment would have banned those derivatives that are, in essence, used by big financial firms to place bets upon bets upon bets, like the kind pioneered by AIG that helped crash the financial system last year. It also was voted down.

"Basically, the financial houses and the big banks are working [these amendments] real hard," Stupak said. "Wall Street's been working hard. We've been tripping over them all week. They've won this round."

Public Citizen offered this explanation:

It's no mystery why this legislation is not stronger. Wall Street spent $5 billion in political investments in the decade before the financial crisis to obtain deregulation and non-enforcement of existing rules.

Despite Wall Street having crashed the economy, nothing has changed on Capitol Hill. Wall Street continues to invest heavily in politics and wield enormous influence. More than 900 former federal employees, including 70 former members of Congress, are working as lobbyists for the financial services sector this year. Wall Street has spent more than $40 million on campaign contributions since November 2008.

"It was the single most important they needed to get right if they wanted to protect the system from future crises, and I don't think they got it right," Roper said.

The bill also addressed investor protection, increasing it in some areas but weakening it in others. Shareholders will now be able to hold non-binding votes on executive compensation -- a big win for investor groups. But the bill also includes a provision that changes current law by exempting about half of all publicly-traded companies from having to get audits of their internal controls. Fraud will be harder to catch, investor groups argue.

The House also voted to kill what many experts, consumer advocates and economists believe to be the best -- and perhaps the only -- way to stem the rising tide of foreclosures: a provision that would have allowed judges to cut the principal for struggling homeowners in bankruptcy.

Belying their expressions of outrage towards banks and sympathy for struggling homeowners, enough Democrats joined Republicans to kill the amendment offered by Democrats John Conyers of Michigan and Jim Marshall of Georgia, by a 241-188 vote.

Bankruptcy courts may reduce several forms of debt for distressed borrowers, but not the mortgage on a primary residence. Judges can, however, alter loan terms on vacation homes and cars, for example.

In March, the House passed a bill that was "substantively identical" to today's amendment, according to a summary of the amendment provided by the chamber's Rules Committee. The Senate, however, voted it down, leading Sen. Dick Durbin (D-Ill.), a longtime advocate for homeowners, to conclude that banks "frankly own the place."

"The financial industry has so much invested in political influence, in lobbying, in campaign contributions, into having a local network through the local banks and the credit unions," said Rep. Brad Miller (D-N.C.). "It's just very hard to go up against that based upon a strong public policy objective."

Backers of the measure thought it had a reasonable chance of passage, since, after all, it had already passed, and the foreclosure crisis has only gotten worse. About one in seven homeowners with a mortgage are either delinquent or in foreclosure. The passage of time, however, gave banks a chance to work the halls.

"We got a vote for it earlier this year, but it took a huge effort. There was none of that effort this time. I think that leadership has been working other issues in the bill, but not that one. And there's enormous opposition to it," said Miller.

One in four homeowners with a mortgage are "underwater," meaning they owe more on the home than it's worth. The administration's $75 billion foreclosure-prevention effort does virtually nothing to help those homeowners, consumer advocates and economists argue.

Furthermore, since the program's launch in March, less than 32,000 troubled homeowners have received permanent relief through the government's mortgage modification plan. It's supposed to help three to four million homeowners avoid foreclosure.

"You would think that would be a strong argument for doing something about it," Miller said. "And with the continued foreclosure rate and the effect that's having on home values and the effect they're having on each other, being such a downward force on our economy. But there's just a united front of opposition by the financial industry. If some members are playing it by thinking, well, I'll give them this vote but then I'll vote for the CFPA, I guess I can see that calculation."

Marshall pinned some of the blame on Treasury Secretary Tim Geithner, who had been cool to the idea last spring.

"The leadership here in the House is a big friend to this bill. The White House, well, the Treasury Secretary made some comments earlier this year that I thought were unfortunate. Other than Geithner's comments, I haven't really heard anything else from the White House. Obviously it's not on their priority list, among the many things they don't have much of an opinion about. Though Geithner did say something, and I wish I could recall, he said something earlier this year that was chilling. Not that he said it was a bad idea, but it certainly wasn't an endorsement," said Marshall.

Candidate Obama supported the idea of allowing judges to modify mortgages in bankruptcy en route to the White House. He even expressed public support in February when outlining his plan to stem foreclosures. But it wasn't in his detailed plan released the next month. Since then, the White House has largely been silent.

President Obama cheered the House action Friday. "This legislation brings us another important step closer to necessary, comprehensive financial reform that will create clear rules of the road, consistent and systematic enforcement of those rules, and a stronger, more stable financial system with better protections for consumers and investors," he said in a statement.

But the loopholes in the bill and the reforms that were voted down revealed something else to Roper -- an apparent deep-seated hostility to government regulation.

Time and time again, Roper noticed various reform proposals killed on the specious claim that they would kill jobs. Looking beyond today's vote, there are deep, structural roadblocks to fundamental reform, she said.

"Even as they're trying to cure the regulatory failures that led to the current crisis, they're setting us up for future crises," she said. "It's a philosophy and attitude to regulation that suggests that as soon as the spotlight is off they will be back to attacking regulation as too costly."

The vote, she said, reveals "that the attitude, the underlying problem, has not changed, and will come back to haunt us in the future."

"It's hard to be all that enthusiastic when you know that nothing has changed," she said.

Excellent videos on financial reform.

http://www.youtube.com/watch?v=pfo9sFYULEE&feature=youtube_gdata

http://www.huffingtonpost.com/2009/11/19/ryan-grim-naomi-klein-dis_n_364022.html

http://www.youtube.com/watch?v=K_KOEypp3zQ

http://www.youtube.com/watch?v=SgfmwO8lDHQ&feature=fvsr

The Night They Drove the Tea Partiers Down

November 8, 2009

By FRANK RICH

http://www.nytimes.com/2009/11/08/opinion/08rich.html?hp=&pagewanted=print

FOR all cable news’s efforts to inflate Election 2009 into a cliffhanger as riveting as Balloon Boy, ratings at MSNBC and CNN were flat Tuesday night. But not at Fox News, where the audience nearly doubled its usual prime-time average. That’s what happens when you have a thrilling story to tell, and what could be more thrilling than a revolution playing out in real time?

As Fox kept insisting, all eyes were glued on Doug Hoffman, the insurgent tea party candidate in New York’s 23rd Congressional District. A “tidal wave” was on its way, said Sean Hannity, and the right would soon “take back the Republican Party.” The race was not “even close,” Bill O’Reilly suggested to the pollster Scott Rasmussen, who didn’t disagree. When returns showed Hoffman trailing, the network’s resident genius, Karl Rove, knowingly reassured viewers that victory was in the bag, even if we’d have to stay up all night waiting for some slacker towns to tally their votes.

Alas, the Dewey-beats-Truman reveries died shortly after midnight, when even Fox had to concede that the Democrat, Bill Owens, had triumphed in what had been Republican country since before Edison introduced the light bulb. For the far right, the thriller in Watertown was over except for the ludicrous morning-after spin that Hoffman’s loss was really a victory. For the Democrats, the excitement was just beginning. New York’s 23rd could be celebrated as a rare bright spot on a night when the party’s gubernatorial candidates lost in Virginia and New Jersey.

The Democrats’ celebration was also premature: Hoffman’s defeat is potentially more harmful to them than to the Republicans. Tuesday’s results may be useless as a predictor of 2010, but they are not without value as cautionary tales. And the most worrisome for Democrats were not in Virginia and New Jersey, but, paradoxically, in the New York contests where they performed relatively well. That includes the idiosyncratic New York City mayor’s race that few viewed as a bellwether of anything. It should be the most troubling of them all for President Obama’s cohort — even though neither Obama nor the national political parties were significant players in it.

But first let’s make a farewell accounting of the farce upstate. The reason why the Democratic victory in New York’s 23rd is a mixed blessing is simple: it increases the odds that the Republicans will not do Democrats the great favor of committing suicide between now and the next Election Day.

This race was a damaging setback for the hard right. Hoffman had the energetic support of Sarah Palin, Glenn Beck, Rush Limbaugh and Fox as well as big bucks from their political auxiliaries. Furthermore, Hoffman was running not only in a district that Rove himself described as “very Republican” but one that fits the demographics of the incredibly shrinking G.O.P. The 23rd is far whiter than America as a whole — 93 percent versus 74 — with tiny sprinklings of blacks, Hispanics and Asians. It has few immigrants. It’s rural. Its income and education levels are below the norm. Only if the district were situated in Dixie — or Utah — could it be a more perfect fit for the narrow American demographic where the McCain-Palin ticket had its sole romps last year.

If the tea party right can’t win there, imagine how it might fare in the nation where most Americans live. Some G.O.P. leaders have started to notice. Mitt Romney didn’t endorse Hoffman despite right-wing badgering to do so. On Wednesday, Michael Steele dismissed the right’s mantra that somehow Hoffman’s loss could be called a victory and instead talked up the newly elected Republican governors who won by appealing to independents and moderates. Chris Christie and Bob McDonnell are plenty conservative, but both had rejected Palin’s offers to campaign for them. They also avoided the tea party zanies, the fear-mongering National Organization for Marriage and the anti-abortion-rights zealots Hoffman embraced. They positioned themselves as respectful Obama critics, not haters likening him to Hitler.

In the aftermath of this clear-cut demonstration of how Republicans can win, the revolutionaries are still pledging to purge the party’s moderates by rallying behind more Hoffmans in G.O.P. primaries from Florida to California. And they may get some scalps. But Tuesday’s loss revealed that they’re better at luring freak-show gawkers into Fox’s tent than voters into the G.O.P.’s. As if to prove the point, protesters hoisted a sign likening health care reform to Dachau at the raucous tea party rally convened by Michele Bachmann on Capitol Hill on Thursday.

Should the G.O.P. avoid self-destruction by containing this fringe, then the president and his party will have to confront their real problem: their identification with the titans who greased the skids for the economic meltdown from which Wall Street has recovered and the country has not. If there’s one general lesson to be gleaned from Christie’s victory over Jon Corzine in New Jersey, it’s surely that in today’s zeitgeist it’s less of a stigma to be fat than a former Goldman Sachs fat cat, even in a blue state.

Michael Bloomberg’s shocking underperformance in New York was an even more dramatic illustration of this animus. Tuesday’s exit polls found that he had a whopping 70 percent approval rating, as befits a mayor who, whatever his quirks and missteps, is widely regarded as a highly competent, nonideological executive who has run the city well. Yet only 72 percent of those who gave him a thumb’s up voted for him. Though the mayor wildly outspent and out-campaigned his bland opponent, Bill Thompson, he received only 50.6 percent of the vote.

This shortfall has been correctly attributed to Bloomberg’s self-serving, highhanded undoing of the term limits law he had once endorsed. The ferocity of the public reaction to this power grab surprised him, pollsters and the press alike. That it became a bigger deal than anyone anticipated — arguably bigger than it merited — is an indicator of how much antipathy there is toward the masters of the universe in the financial capital. Americans don’t hate rich people, but they do despise those who behave as if the rules don’t apply to them. “Michael Bloomberg is About to Buy Himself a Third Term” was the cover line on New York magazine in October. However unfairly, some voters conflated his air of entitlement with the swaggering Wall Street C.E.O.’s who cashed out before the crash and stuck the rest of us with the bill.

The Obama administration does not seem to understand that this rage, left unaddressed, could consume it. It has pushed aside the entreaties of many — including Paul Volcker, the chairman of the White House’s own Economic Recovery Advisory Board — to break up too-big-to-fail banks. Those behemoths, cushioned by the government’s bailouts, low-interest loans and guarantees, are back making bets that put the entire system at risk. Yet last Sunday, we once again heard the Treasury secretary, Timothy Geithner, on “Meet the Press” dodging questions about the banks in general and Goldman in particular with unpersuasive bromides. “We’re not going to let the system go back to the way it was,” he said.

Surely he jests. On Monday morning, a business-savvy Democratic senator, Maria Cantwell of Washington, publicly questioned Geithner’s fitness for his job, given his support of loopholes in proposed regulations of the derivatives that enabled last year’s collapse. On Tuesday, Congressional Democrats, with the White House’s consent, voted to gut the Sarbanes-Oxley Act, the post Enron-WorldCom law passed in 2002 to prevent corporate accounting tricks and fraud. Arthur Levitt, the former Securities and Exchange Commission chairman, told me on Friday it was “surreal” that Democrats were now achieving the long-held Republican goal of smashing “the golden chalice” of reform. If investors cannot have transparency, Levitt said, “the whole system is worthless.”

The system is going back to the way it was with a vengeance, against a backdrop of despair. As the unemployment rate crossed the 10 percent threshold at week’s end, we learned that bankers were helping themselves not just to bonuses as large as those at the bubble’s peak but to early allotments of H1N1 vaccine. No wonder 62 percent of those polled by Hart Associates in late September felt that “large banks” had been helped “a lot” or “a fair amount” by “government economic policies,” but only 13 percent felt the “average working person” had been. Unemployment ranked ahead of the deficit and health care as the No. 1 pocketbook issue in the survey, with 81 percent saying the Obama administration must take more action.

The tea party Republicans vanquished on Tuesday have no jobs plan. They just want to eliminate all Washington spending — a prescription that didn’t go down too well in New York’s 23rd, where the federal government has the largest payroll. The G.O.P. establishment’s one-size-fits-all panacea is tax cuts — thin gruel for those with little or no taxable income. The administration’s answer is the stimulus, whose iffy results so far, it argues, can’t be judged this early on.

Fair enough. But a year from now the public will register its verdict in any event. Meanwhile, both parties have their own delusions, not the least of which is the Republicans’ conviction that Tuesday was a referendum on what Obama has done so far. If anything, it was a judgment on just how much he has not.

Copyright 2009 The New York Times Company

Public option winning?

http://www.dailykos.com/storyonly/2009/10/24/796740/-Public-Option,-Triggers,-Opt-Out,-Oh-My!

Tea baggers stage a small protest against big government.

President Obama's inauguration was big, about 2 million people. The Washington DC fire department estimated about 60,000 to 70,000 tea baggers on September 12.

Here's a short summary from Talking Points Memo.

http://www.talkingpointsmemo.com/archives/2009/09/small_protest_agst_big_govt.php?ref=fpblg

Obama’s Squandered Summer -- Frank Rich

September 13, 2009

By FRANK RICH

THE day before he gave his latest brilliant speech, Barack Obama repeated a well-worn mantra to a television interviewer: “My job is not to be distracted by the 24-hour news cycle.” The time has come for him to expand that job description. His White House has a duty to push back against the 24-hour news cycle, every 24 hours if necessary, when it threatens to derail his agenda, the nation’s business, or both. This was a silly summer, as wasteful in its way as the summer of 2001, when Washington dithered over the now-forgotten Gary Condit scandal while Al Qaeda plotted. The president deserves his share of the blame.

After a good couple of years of living with the guy, we know the drill that defines his leadership, for better and worse. When trouble lurks, No Drama Obama stays calm as everyone around him goes ballistic. Then he waits — and waits — for that superdramatic moment when he can ride to his own rescue with what the press reliably hypes as The Do-or-Die Speech of His Career. Cable networks slap a countdown clock on the corner of the screen and pump up the suspense. Finally, Mighty Obama steps up to the plate and, lo and behold, confounds all the doubting bloviators yet again by (as they are wont to say) hitting it out of the park.

So it’s a little disingenuous for Obama to claim that he is not distracted by the 24-hour news cycle. What he’s actually doing is gaming it for all it’s worth.

As a mode of campaigning, this tactic was worth a great deal. Obama not only produced eloquent speeches — especially the classic disquisition on race that silenced the Jeremiah Wright pogrom — but also executed a remarkably disciplined tortoise-vs.-hare battle plan that outwitted and ultimately vanquished the hypercaffeinated political strategies of Hillary Clinton and John McCain. As a style of governing, however, this repeated cycle of extended above-the-fray passivity followed by last-minute oratorical heroics has now been stretched to the very limit.

Wednesday night’s address on health care reform was inspired, lucid and, in the literally and figuratively Kennedyesque finale, moving. It was also (mildly) partisan, a trait much deplored by high-minded editorial writers but in real life quite useful when your party is in the majority and you want to rally the troops to get something done. But there was little in the speech that Obama couldn’t have said at the summer’s outset. Its practical effect may prove nil. Short of signing a mass suicide pact, the Democrats were always destined to pass a bill. Will the one to come be substantially better than the one that would have emerged if the same speech had been delivered weeks earlier? Not necessarily — and marginally at most.

In the meantime, a certain damage has been done — to Obama and to the country. The inmates took over the asylum, trivializing and poisoning the national discourse while the president bided his time. The lies that Obama called out so strongly in his speech — from “death panels” to “government takeover” — ran amok. So did all the other incendiary faux controversies, culminating with the ludicrous outcry over the prospect that the president might speak to the nation’s schoolchildren on a higher plane than, say, “The Pet Goat.”

None of this served his cause of health care reform or his political standing. The droop in Obama’s job approval numbers isn’t remotely as large or precipitous as the Beltway’s incessant doomsday drumbeat suggests. But support for his signature program declined, not least because he gave others carte blanche to define it for him. Perhaps the most revealing of all the poll findings came in an end-of-August Washington Post query asking voters what “single word” first came to mind to describe their “feelings” about Obama and his health care proposals. For Obama, the No. 1 feeling was “good.” For the policy package he’d been ostensibly selling all summer, the No. 1 feeling was “none.”

It’s not, as those on the right would have us believe, that Obama’s ideas are so “liberal” that the American public recoiled. It’s that much of the public didn’t know what his ideas were. Even now I’m not convinced that most Americans know what a “public option” really means or what Obama’s precise position on it is. But I’d bet that many more have a working definition of “death panels.” The 24-hour news cycle abhors a vacuum, and the liars and crazies filled it while Obama waited for his deus ex machina descent onto center stage.

That he let the hard-core base of a leaderless minority party drive the debate only diminished his stature. That’s why his poll numbers on “leadership” declined. The right-wing fringe has become so deranged that it will yank its kids out of school to protest the president and risk yanking more Americans off assembly lines by boycotting General Motors to protest the administration’s Detroit bailout. Even Laura Bush and Newt Gingrich stepped in last week to defend Obama’s classroom homily from the fusillades by some of their own party’s most prominent ideologues. The White House should have landed a punch before they did.

Obama would have looked stronger if he’d stood up more proactively to the screamers along the way, or at least to the ones not packing guns. As the Roosevelt biographer Jean Edward Smith has reminded us, it didn’t harm the New Deal for F.D.R. to tell a national radio audience on election eve 1936 that he welcomed the “hatred” of his enemies. Indeed Obama instantly gained a foot or two in height Wednesday night once that South Carolina clown hollered “You lie!” (One wonders what this congressman calls the Republican governor of his own state, Mark Sanford.) As the political analyst Charlie Cook has pointed out, Obama’s leadership poll numbers have also suffered from his repeated deference to Congress. Waiting for the pettifogging small-state potentates of both parties in the Senate’s Gang of Six is as farcical as waiting for Godot.

Now that he has taken charge, Obama will speed the process and, we must hope, secure reform that may make a real difference for everyone, starting with the 46-million-plus Americans who have no health insurance. But when we gain some perspective on the summer of 2009, the health care debate, like the crazed town-hall sideshows surrounding it, may seem very small in the history of this presidency — maybe even as small as the Condit follies and the breathlessly reported shark attacks of summer 2001 now look in the history of the previous administration.

The reason is that health care reform, while an overdue imperative, still is overshadowed in existential urgency by the legacies of the two devastating cataclysms of the Bush years, 9/11 and 9/15, both of whose anniversaries we now mark. The crucial matters left unresolved in the wake of New York’s two demolished capitalist icons, the World Trade Center and Lehman Brothers, are most likely to determine both this president’s and our country’s fate in the next few years. Both have been left to smolder in the silly summer of ’09.

As we approach the eighth anniversary of the war that 9/11 bequeathed us in Afghanistan, the endgame is still unknown and more troops are on their way. Though the rate of American casualties reached an all-time high last month, the war ranks at or near the bottom of polls tracking the issues important to the American public. Most of those who do have an opinion about the war oppose it (57 percent in the latest CNN poll released on Sept. 1) and oppose sending more combat troops (56 percent in the McClatchy-Ipsos survey, also released on Sept. 1). But the essential national debate about whether we really want to double down in Afghanistan — and make the heavy sacrifices that would be required — or look for a Plan B was punted by the White House this summer even as the situation drastically deteriorated.

No less unsettling is the first-anniversary snapshot of 9/15: a rebound for Wall Street but not for the 26-million-plus Americans who are unemployed, no longer looking for jobs, or forced to settle for part-time work. Some 40 million Americans are living in poverty. While these economic body counts keep rising, tough regulatory reform for reckless financial institutions, too-big-to-fail and otherwise, seems more remote by the day. Last Sunday, Jenny Anderson of The Times exposed an example of Wall Street’s unashamed recidivism that takes gallows humor to a new high — or would were it in The Onion, not The Times. Some of the same banks that gambled their (and our) way to ruin by concocting exotic mortgage-backed securities now hope to bundle individual Americans’ life insurance policies into a new high-risk financial product built on this sure-fire algorithm: “The earlier the policyholder dies, the bigger the return.”

When we look back on these months, we may come to realize that there were in fact “death panels” threatening Americans all along — but they were on the Afghanistan-Pakistan border and on Wall Street, not in the fine print of a health care bill on Capitol Hill. Obama’s deliberative brand of wait-and-then-pounce leadership let him squeak — barely — through the summer. The real crises already gathering won’t wait for him to stand back and calculate the precise moment to spring the next Do-or-Die Speech.

Copyright 2009 The New York Times Company

But Who Is Watching Regulators?

September 13, 2009
Fair Game
But Who Is Watching Regulators?
By GRETCHEN MORGENSON

NOTHING succeeds like failure, as the saying goes. And nowhere is this dismal truth more evident than in our financial regulatory system, one year after the bankruptcy filing of Lehman Brothers.

Even though calamitous lending practices laid waste to the nation’s economy, surprisingly little has changed about how the financial arena operates and is supervised. Sure, a couple of venerable brokerage firms have vanished, but many of the same players remain on the scene, in the same positions of power.

Senior regulators who stood idly by for years as financial firms built their houses of cards have been rewarded with even bigger jobs or are jockeying for increased responsibilities. The Federal Reserve Board, for example, wants to become the financial system’s uber-regulator, even though its officials did nothing as banks made deadly decisions to lend recklessly and leverage themselves to the max.

Awarding increased power to those who failed in their oversight duties flies in the face of all notions of accountability. Imagine hiring Angelo R. Mozilo, the former chief of Countrywide Financial, to run a global financial institution, or installing E. Stanley O’Neal, who presided over a disastrous period at Merrill Lynch, at the helm of a major investment firm.

Yet those in the public sector ask us to believe that regulators who snoozed during the credit bubble will be alert to emerging problems on their beats when the next mania begins.

That’s asking a lot, isn’t it?

Here’s a novel thought. Instead of creating more regulations to try to prevent this kind of mess from recurring, why not figure out how to hold regulators accountable when they perform as poorly as they did in recent years?

Edward J. Kane, a professor of finance at Boston College and an authority on the ethical and operational aspects of regulatory failure, has some ideas about how to do this and right our damaged system in the process. He outlined them in a recent paper titled “Unmet Duties in Managing Financial Safety Nets.”

This ugly financial episode we’ve all had to live through makes clear, Mr. Kane says, that taxpayers must protect themselves against two things: the corrupting influence of bureaucratic self-interest among regulators and the political clout wielded by the large institutions they are supposed to police. Finally, he argues, taxpayers must demand that the government publicize the costs of efforts taken to save the financial system from itself.

“That authorities and financiers could so callously violate common-law duties of loyalty, competence, and care they owe taxpayers and financial-institution customers is evidence of a massive incentive breakdown in industry and government,” Mr. Kane writes. “This breakdown cannot be repaired merely by replacing the governing political party or by changing the jurisdictions and mission statements of regulatory agencies.”

It’s tough, however, to assign responsibility to regulators who routinely fend off or stymie anyone attempting to scrutinize how the cops on the beat functioned in the years preceding the financial meltdown. So everyday Americans need to kick and scream if they want some light shed on this critical epoch in our financial history.

To bring accountability to regulatory performance, Mr. Kane suggests that financial supervisors take an oath of office in which they agree to perform four duties. First is the duty of vision, under which they would promise to adapt their surveillance practices to respond to the creative ways financial institutions hide their dubious practices. Regulators must also promise to take prompt corrective action, and to perform their work efficiently. Finally, there is what Mr. Kane calls the duty of “conscientious representation,” whereby regulators swear to put the interests of the community ahead of their own.

This last promise gets to the heart of a continued erosion of trust in our system, Mr. Kane argues. “If real world supervisors were perfectly virtuous, they would make themselves politically and financially accountable for the ways in which they exercise their discretion,” he writes. “Perfectly virtuous supervisors would fearlessly bond themselves to disclose enough information about their decision making to allow the community or interested outsiders to determine whether and how badly they neglect, abuse, or mishandle their responsibilities.”

Instead, our regulators refuse to produce complete documentation and accounts of the actions they took during the crisis. And keeping taxpayers in the dark isn’t exemplary ethical behavior. Rather, it is characteristic of what Mr. Kane calls an elitist regulator, one who uses crises to cover up mistakes and expand his or her jurisdiction.

“According to this standard,” Mr. Kane writes, “Fed efforts to use the crisis as a platform for self-congratulation and for securing enlarged systemic-risk authority sidetracks, rather than promotes, effective reform.”

To ensure that regulators live up to the promises they make, Mr. Kane suggests that inspectors general at each agency be charged with regularly auditing the performance of financial overseers. A crucial component of those reviews would be exploring attempts by regulated entities to influence the officials who oversee them. That’s because in financial crises, Mr. Kane explained, crippled institutions pressure the government to rescue them and force other parties (usually the taxpayers) to share their pain.

“We’ve got a very comfortable equilibrium here where Wall Street praises the authorities and the authorities give Wall Street more or less what it wants and they hope that the public really doesn’t understand the depth of the cynicism involved,” Mr. Kane said in an interview. “You keep reading about how wonderful it is that we didn’t have a Great Depression. Well, if they can sell that point of view, then nothing will change.”

Copyright 2009 The New York Times Company

THE ECONOMY AND HEALTH CARE (what else is new?)

THE ECONOMY

Mixed news on the US economy

1. http://www.ft.com/cms/s/0/cf328fb2-8d99-11de-93df-00144feabdc0.html

2. Greetings from RGE Monitor! Below you will find a preview of our views on the short- and medium-term outlook for the U.S. economy.

Rebalancing Growth
A number of economic and financial variables have exhibited signs of improvement recently even if macro indicators are still mixed. The pace of economic deterioration has slowed significantly, and after four quarters of severe contraction in economic activity, RGE Monitor now forecasts that the U.S. will display positive real GDP growth in the second half of 2009. As discussed below, however, that does not mean that the recession in the U.S. is already over, as many analysts have argued. Indeed, all the variables used by the National Bureau of Economic Research (NBER) to date recessionary periods will continue to contract or display sub-par growth. However, RGE Monitor now anticipates that policy measures and other factors will boost real GDP growth, albeit in a temporary manner, in the second half of 2009. Yet the shape of the recovery (will it be V, U or W?) and other challenges will influence the U.S. economic outlook going forward. According to RGE Monitor, growth will remain well below potential in 2010, while the shape of the recovery will be closer to a U. Some of the so-called “green shoots” observed in the economy in recent months can be defined as green shoots only if compared with the economic picture painted at the beginning of the year. The contraction in some indicators, such as industrial production, is still comparable to the recessions in the 1970s and 1980s. The July 2009 employment report displayed “only” 247,000 non-farm payroll losses—hardly qualifying as a green shoot in any other post-war recession. (See Easing Job Losses Don’t Change Weak Prospects for U.S. Recovery).

However, given how close the U.S. was to entering a depression, even 250,000 payroll losses seem capable of cheering up investors. H2 2009 Pick-Up in GDP Growth a Temporary Phenomenon In H2 2009, as the economy bottoms out from a record contraction (the worst in the last 60 years), adjustments, such as slower inventory destocking, will occur, while policy measures such as “cash for clunkers” will boost auto production and induce continued spending brought on by the stimulus. According to RGE Monitor, these factors will likely bring U.S. real GDP growth back to positive territory in Q3 2009. However, the NBER is not likely to call the end of the recession until at least late 2009 or early 2010.

In addition to GDP growth, the NBER looks at four variables in making recession calls: real personal income less transfer payments, real manufacturing and wholesale-retail trade sales, industrial production and payroll employment. While all of these indicators might perform better in H2 than in H1 2009, they are likely to remain in contraction or register sub-par growth. With the labor market now a leading indicator for the recovery in private consumption and the wider economy, trends in payrolls will definitely influence the NBER's call. Lower Trend Growth Will Characterize the Recovery The inventory adjustments will largely be over by the middle of 2010 as will the impact of the stimulus. But since the recovery in private demand will be weak, the economy is poised to slip back to anemic growth (well below potential) in 2010, posing the risk of a double-dip recession. Exhausting most policy measures now means that there will be little room for additional fiscal and monetary stimuli in the future. Policy measures entailing long-term fiscal costs can only provide temporary stimulus to growth. Any sustained economic recovery will ultimately have to come from the revival in private demand—i.e. through consumption and investment—both of which will be constrained by structural factors. Preceded by a financial crisis, this is the most severe and prolonged recession since the 1930s. Avoiding the short-term pain of private-sector deleveraging by socializing private losses and re-leveraging the public sector with large deficits and debt accumulation will spur long-term costs and crowd out private spending. The drivers of the previous economic boom—consumers, the housing sector and easy credit—will remain under pressure even after the economy is out of recession. Structural weaknesses will persist. Until the economy finds new sources of growth, it will grow below potential for several years. Potential GDP growth might also take a hit, falling from around 2.8% during 1997-2008 to around 2.25% in the coming years. Productivity growth has held up—on a temporary basis—during the current recession, not due to innovation or productive investment, but due to aggressive cuts in labor and labor hours by firms. In the coming years, productivity growth will remain under pressure as workers age, structural unemployment rises, labor skills deteriorate, and investment and innovation slow.

3. Brighter signs in Europe

http://www.ft.com/cms/s/0/52947306-8cdd-11de-a540-00144feabdc0.html

4. Long-term (and scary) view of the crisis, comparing the Great Depression to the Great Recession -- long article, but very interesting

http://www.voxeu.org/index.php?q=node/3421

ON HEALTH CARE

Have the Republicans pushed the envelope too much?

1. Senator Grassely and townhall meetings

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/19/AR2009081004125.html?wpisrc=newsletter

2. The end of bipartisanship?
http://www.nytimes.com/2009/08/19/health/policy/19repubs.html?_r=1&ref=health

3. The Health Insurance Industry according to a free-market supporter


Health Care War! by Martin D. Weiss, Ph.D.

Dear Subscriber,

What you're witnessing in the U.S. today is not a health care debate. It's a health care WAR.
But it's too soon to take sides: Neither has defined its territory; both are escalating the battle with weapons of mass disgrace. In the meantime, millions of Americans are potentially innocent victims of the collateral damage — both financially and physically. But if you're among those upset at the Obama administration for trying to ram through a health reform bill, wait till you see what most health insurance companies are doing — and have been doing for many years!

They routinely overcharge you on premiums when you're healthy and deny your claims when you're sick.
They welcome your policy when you don't need it and shred it when you do.

Adding financial insult to personal injury, they take the savings you've worked so hard to earn and throw it into high-risk investments you'd never touch with a ten-foot pole.

.....
How Americans Are Routinely Bullied, Cheated, And Abused by Their Health Insurance Companies

The business battles I fought with insurers are inconsequential in comparison to the life-and-death struggles fought by millions of Americans with their insurance companies every day.
All I lost was time and money. In contrast, a young mother with bone cancer who fought against the same company that sued me lost a lot more: her life.

In a trial after her death, the jury read internal memos that revealed a sinister plot: To reduce their costs, not only did the company's executives pursue extreme measures to deny her the treatments that could have saved her life ... they also discussed the cost benefits of hastening her demise. The jurors were so outraged, they awarded her family the largest punitive damage award in the history of health insurers. Think these are just isolated cases? Think again!

Here are just a few of the rampant abuses that continue to this day:

Abuse #1Denial machines ...

Most health insurers spend substantial sums in order to develop computer programs and systems that automatically and repeatedly deny and delay claims payments;
hire doctors specialized in poking holes in legitimate claims; and give extra bonuses to employees who can successfully deny the most claims. In sum, health insurers build massive machines designed with the sole purpose of denying and delaying your claims. They know that few policyholders will take legal action. Plus, even though policyholders do win judgments, the companies can earn a lot of extra income on the funds they hold back with delayed claims payments. The longer you or your doctor has to wait for reimbursement, the more income they can make on your money.

And unfortunately, this is not just about a few bad apples in the industry. According to the National Association of Insurance Commissioners (NAIC), in 2008 alone, policyholders filed 195,669 complaints against insurance companies. That excludes complaints in many states which do not compile comparable data and, needless to say, it also excludes the millions of Americans who do not file a formal complaint.

The two most common types of complaints of all: delays and denials.
"All too often," says New York Attorney General Cuomo, "insurers play a game of deny, delay, and deceive." And, I might add, all too often, people are bankrupted by the expenses or die waiting for the care.
But it gets worse ...

Abuse #2 After-the-fact policy cancellations ...

Just last Tuesday, the U.S. Department of Health and Human Services released a study demonstrating that, in most states:
Insurance companies can retroactively cancel individual policies if any condition was not disclosed when the policy was obtained. More to the point, insurers can cancel the policies even if the medical condition is unrelated and even if the person was not aware of the condition at the time. (Italics are mine.)

Coverage can also be revoked for all members of a family, even if only one family member failed to disclose a medical condition.

And again, companies institute sophisticated systems and procedures that maximize the savings with these underhanded tactics, including special compensations for employees who can deploy them most effectively.
Two major insurers have admitted to Congressional committees that they automatically investigate the medical records of every policyholder with certain conditions, including leukemia, ovarian cancer, brain cancer, and becoming pregnant with twins.

For example, in one case, after a Texas resident was found to have a lump in her breast, the insurance company investigated her medical history and concluded that she had been diagnosed previously with osteoporosis. Although that condition was unrelated to breast cancer, the company used it as an excuse to cancel her policy.

No, I don't support the notion that underwriting — the process of denying coverage or charging higher premiums due to known risks — is somehow evil. Quite the contrary, if insurers do NOT protect themselves from those risks, they may not be financially capable of fulfilling their promises to all other policyholders. But systematically leveraging contract loopholes to cancel policies after a condition is diagnosed fails to pass the most basic of smell tests.

The most insidious abuse of all: Direct interference with medically recommended procedures ...
"One of our big frustrations with insurance companies," says GOP Congressman Tim Murphy, "is they control the market place, they control what's done," and what doctors decide.
Indeed, in 50 out of 300 U.S. metropolitan areas, a single health insurer controls at least 70 percent of customers. And in many more areas, just two health insurance companies dominate the market.

That puts both you and your doctor at a great disadvantage.
End result: Your doctor's decisions about what's best for your health are frequently overruled by the insurer's decisions about what's best for its bottom line.
Most patients don't realize how widespread this is and how deeply it can impact the quality of care. Most doctors, meanwhile, are so sick and tired of insurance company interference, they've given up complaining.

Which Companies Are the Worst Offenders?
For the most part, government officials are loathe to give you straight answers. But I do. Based on my review of customer complaint data compiled by key states, here's my partial list:
Some Major Health Insurers and HMOs WithThe MOST Frequent Customer Complaints American International GroupAtlantis Health Plans, Inc.Celtic Insurance CompanyCIGNA Healthcare of NY, Inc.Fortis GroupGHI HMO Select, Inc.Mutual of Omaha GroupOxford Health Plans of NYUnitedHealth Group

Not all insurers routinely resort to bad business practices. In fact, some bend over backwards to pay claims promptly and avoid customer complaints ...

Some Major Health Insurers and HMOs WithThe LEAST Frequent Customer Complaints CNA Insurance GroupMass Mutual Life Ins. Co.Northwestern MutualSun Life Assurance Company of CNUniversal American FinancialUNUMProvident Corp. Group

My Recommendations Are Very Straightforward ...
First and foremost, do everything within reason to avoid the worst providers and stick with the best. My lists above are not complete, but I'm confident in my conclusions for each company cited. Second, be sure to keep all your medical records and correspondence with insurers.
Third, if your insurer tries to stiff you for bills you feel should be covered, file a formal complaint. Some states let you file your complaint online. Others require you do it via mail. Either way, do not let insurance companies get away with behavior that you feel is unfair or abusive.
Fourth, if you can't get satisfaction, seriously consider legal action. The good news: Most of the time, plaintiffs with good documentation do win.