“Bankers Are Balking at a Proposed Rule on Capital” Gretchen Morgenson – The New York Times

See on Scoop.itDidYouCheckFirst

“Over the next two months, the regulators proposing this rule will no doubt encounter a lobbying buzz saw. Mr. Hoenig (vice chairman of the F.D.I.C.) said he and his colleagues were bracing for that. Bankers, after all, prefer things just the way they are. They can load up on leverage to take risks and reap the rewards. But when losses abound? Well, they’re the taxpayers’ problem.” – Gretchen Morgenson, assistant business and financial editor and a columnist at the New York Times.

Greg Russak‘s insight:

Letting banks regulate themselves with what is called ‘risk-weighting’ didn’t work out so well in the past.

“This so-called risk-weighting approach was an abject failure. For example, the assumptions characterized the sovereign debt of Greece as risk-free, requiring that banks set aside no capital against those holdings for possible losses. The risk-weight system also determined, incorrectly, that highly rated mortgage securities fell low on the risk scale.”

Why shouldn’t banks be regulated up to their eye-balls? How can we think bankers can be trusted now?

Either they are horrible at analyzing risk and need lots and lots of oversight or, more likely, they know that in an under-regulated environment they can privatize any gains and socialize all their losses back to us through future federal bailouts.

See http://www.nytimes.com/2013/07/14/business/bankers-are-balking-at-a-proposed-rule-on-capital.html?ref=gretchenmorgenson&_r=0

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The Magnetar Trade: How One Hedge Fund Helped Keep the Bubble Going (Single Page) from ProPublica.com

Worth the read for anyone who wants to understand what happened to cause the economic crash from inside the complex world of collateralized debt obligations, credit default swaps, and individual bankers, CDO managers, and hedge funds.

http://www.propublica.org/feature/all-the-magnetar-trade-how-one-hedge-fund-helped-keep-the-housing-bubble

If you prefer listening to the story, you can stream it or download the an MP3 file from http://www.thisamericanlife.org/radio-archives/episode/405/inside-job

Vilifying the Poor – Rebuttal to Star Parker

So, a friend sends an email to me containing a piece written by Star Parker summarizing (pitching?!?!) her 6 year old book, Uncle Sam’s Plantation. This was my response….

Let’s face it. One has to deal in facts – true facts or lies that are claimed to be facts – to get the attention of Factcheck.org. Star Parker offers neither. She only has opinions. Maybe her absence from sites like Factcheck ought to be read as testimony to her utter irrelevance in the larger debate about federal spending, policy matters, budgets, and the poor.

In my opinion, she’s nothing more than the African-American Ann Coulter. Have a listen to her at: http://www.urbancure.org/article.asp?id=3162 She and Ann make about the same amount of sense to me, too…….none.

And it comes as no surprise to me that only the yellowest of all the news networks, The Hannity/Beck Network, would even care about what she has to say.

If anyone is interested in some facts about the programs she vilifies, here are some links you might find useful.
* Temporary Assistance for Needy Families (TANF): http://www.acf.hhs.gov/programs/ofa/tanf/about.html
“Under the welfare reform legislation of 1996, (the Personal Responsibility and Work Opportunity Reconciliation Act – PWRORA – Public Law 104-193), TANF replaced the welfare programs known as Aid to Families with Dependent Children (AFDC), the Job Opportunities and Basic Skills Training (JOBS) program and the Emergency Assistance (EA) program. The law ended federal entitlement to assistance and instead created TANF as a block grant that provides States, territories and tribes federal funds each year. These funds cover benefits, administrative expenses, and services targeted to needy families. TANF became effective July 1, 1997, and was reauthorized in February 2006 under the Deficit Reduction Act of 2005.”

The Goals stated are
” States receive a block grant to design and operate their programs to accomplish the purposes of TANF.

These are:

  • assisting needy families so that children can be cared for in their own homes
  • reducing the dependency of needy parents by promoting job preparation, work and marriage
  • preventing out-of-wedlock pregnancies
  • encouraging the formation and maintenance of two-parent families.”


Now we can’t have any of that, now can we?

* Job Opportunities and Basic Skills Training (JOBS): was replaced 13 years ago by the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) (see above and http://www.childtrends.org/Lifecourse/programs/JOBS.htm)

* Emergency Assistance to Needy Families with Children (EANF)
One of the rare situations where you can actually stump Google.
Your search – “Emergency Assistance to Needy Families with Children (EANF)” site:.gov – did not match any documents.
If she’s going to criticize a program – one that looks like it no longer exists (see above), was administered by states and, at least in New York, required conditions like you to be homeless with little or no food (http://www.dads.ny.gov/main/ta/default.asp) – she should at least get the name right. Those kinds of errors tell me a lot about the credibility of the source……again, none.

So what’s my point? To point out what I consider to be the obvious, of course! 😉 Like most people with an agenda, she’s not letting facts get in the way.

And why this fascination with vilifying the poor?
…They don’t make laws
…They don’t have lobbyists
…They don’t have much, if any, money
…They don’t own banks, brokerages, or insurance firms
…They aren’t typically registered as members of the party who passed such legislative gems in the name of capitalism and free markets as the Graham-Leach-Bliley act which, as you all know, removed all the safeguards, oversights, regulations, and restrictions on financial services companies created by the Glass-Steagall act which, as you also know, had to be passed by a Democratically-led Congress in 1933 to try and protect us from the greedy motherf***ing capitalists who gave us the first Great Depression and are back with their sequel, “Great Depression II: You Dumb-Asses Didn’t Learn a Thing the First Time, Did You?”
…The poor didn’t create bullshit investment instruments like collateralized debt obligations that tanked the whole friggin’ world’s economy while the modern day heros of capitalism were still getting paid their obscenely large bonuses
…The poor weren’t the ones buying homes they couldn’t afford, nor were they the ones writing the mortgages without so much as a passing interest in anyone’s ability to repay the loan because the mortgages were being bundled and sold to someone else which eventually turned into the CDOs which…..oh hell, my head is spinning.
…They don’t lobby their Senators and Representatives for tax cuts to wealthy Americans that accomplished nothing except to piss away a federal surplus and didn’t create any noticeable improvement to the economy
…They didn’t leave the Obama administration with a wrecked economy, a $500billion deficit (which probably doesn’t really account for everything since W did Iraq off the books), a financial system in total ruin thanks to a lack of regulation, and a world roiling in political, social, and cultural turmoil

Do I really need to go on?

So what’s her message – all you poor African Americans stop sitting around pretending that there’s no work and go out there and make your mark in the world? Is that it? Is that all that’s needed to get our economy growing again?

So Obama should abandon social programs and keep funneling money to the wealthy? Will that solve our problems?

Or is she also complaining that the president didn’t just let W’s utter and complete disaster culminate in the closing down of the world’s economy? Let them fail, is that it? No such thing as too big to fail? Now that really would have been poetic justice for those who really think there is such a thing as capitalism and free markets, now wouldn’t it?

I’ve news for you…..there’s no such thing. The world is run by an oligarchy of rich and powerful people. It’s not James Bond versus Specter, but it’s not truly capitalism or free markets, either. And Oboma ain’t no savior and he ain’t no devil. He’s one of them, too, just a little further to the left than others.

Hell, it’s starting to look more and more like how Bill Mahr recently described our two-party system, “Democrats have moved to the right, and the right has moved into a mental hospital.”

So let’s say that Star (is that really her name?) is right. How could she not be, right? Hell, just look at the facts.
1. Our primary and secondary public education is extremely well-funded, progressive, and effective especially in inner city neighborhoods.
2. Higher education is eminently affordable to anyone who wants to go.
3. And the Republican administration of the last 8 years with all of their free market deregulation, tax cuts for the wealthy, and sound economic and fiscal policies has left us with an economy so sound and robust that it’s just chock full of great paying jobs whether or not you even have a degree and so long as you get your sorry, shiffless, ass of the front stoop and go looking.

Right……..

😉

Don’t Blame the Borrower – How a Republican Congress Helped to Create the Current Economic Crash and Continues to Erode the Middle Class

As I see it, the reality is that our current economic problems stem directly from deregulated financial markets. We can thank Alan Greenspan, appointed by Reagan, and the pro-business, deregulatory belief system of the Republican party for that.

YOU CAN’T BLAME ME FOR ASKING
Let’s start with the mortgage crises since that seems to be something most people can agree is at the root of our current economic problems. The notion that we should blame the person applying for a mortgage that they can’t afford versus the people and systems that are supposed to screen applicants and then say, “No” is just silly, but that seems to be the position of social and fiscal conservatives.

Let’s see where the argument for blaming the applicant takes us……

  1. Let’s say I go to a bank or lender and apply for a mortgage suspecting – or even knowing – I can’t pay it back.
  2. The bank decides not to check me out and deny my application. Why? They know they won’t be holding my loan very long. Why not? Because they don’t have to and aren’t motivated to thanks to the Gramm-Leach-Bliley Act, a law passed in 1999 while Clinton was president but Congress was controlled by Republicans. Remember that it is, after all, Congress who makes law, not presidents. GLBA was authored by Republican Senator Phil Gramm and Republican Representative Jim Leach, with contributions from Republican Rep and House Commerce Committee Chairman, Tom Bliley. It effectively removed regulations on banks created in 1933 by the Glass-Steagall Act which, itself, was a response to conditions not at all unlike today that caused the Great Depression – an unregulated financial services industry.
  3. Because sufficient regulations no longer exist thanks to the GLBA, lenders of all kinds – including banks – can now package and sell my loan with thousands of others to someone else and wash their hands of the initial risk of lending me money. No reason to deny my application if they aren’t worried about me paying it back – that’s someone else’s worry now.

So what should we expect will happen? No one will deny my loan application because there’s money to be made quickly by writing the loan and selling the now infamously “toxic asset” to someone else. Well, here’s what will and did seem to happen…

  1. I and lots of people will get mortgages we don’t qualify for
  2. The re-packaged investments will be sold to someone else
  3. Those packaged securities will become worthless because not enough people can pay them back, and
  4. The financial services companies who used to be regulate banks but who no longer fall under enough regulation and scrutiny will go crying to the very same government who stopped regulating them in the first place to now bail them out.

The Rich make and pass laws to benefit the Rich, and when things go bad we as citizens pay for it through weaker markets and inflated government debt. If we were real Capitalist, we’d let them all fail just like Bear Stearns and Leahman Brothers, but that would create complete anarchy…..actually, it would mean a lot of rich people would lose a lot of money, and that will NEVER happen.

So if you’re blaming Clinton for perpetuating the idea of broader home ownership as the reason for our current problems, you really need to look at the simple truth of the matter.

If you’re somehow trying to make a connection between broader home ownership and too many unqualified loan applicants, then you really have to blame GLBA and greed for that. Home ownership is still a great idea for our society, but deregulating the lenders and blaming the borrower doesn’t make sense.

RICH REPUBLICANS AND THE MIDDLE CLASS
Plain and simple, the current economic problems can be traced back to when Republicans had a Congressional majority and could create laws that allowed their supporters and constituents in big business and especially big finance to maximize return and minimize risk. As a result of GLBA, their big money supporters were able to create Bank of America, Citigroup, and J.P. Morgan Chase.

Pretty soon, financial markets were a free-for-all, just as they had been before the Great Depression. Firms that had once been regulated so that they wouldn’t fail were now buying and selling every imaginable type of security without rules, including mortgages that never would have been approved to begin with which are now re-packaged as some kind of investment vehicle.

The American Middle Class once again allowed themselves to be duped by the wealthy and powerful. It’s not the borrowers fault if they are lent money they can’t repay. The lender is supposed to say, “No” if they know the only way they make money is if the borrower pays them back. The lack of regulation allowed – hell, encouraged – those loans to written and then sold off as investments so that the rich could get richer off of the transaction without any regard for the borrower or the affects that so much failed lending could have on everyone and the economy.

The lack of regulation on the banking industry is the classic fox in charge of the hen house. It’s easy to see that a few very smart and very rich people understood how to make a great deal of money out of the house of cards that was the real estate bubble.

THE FATHER OF SMALLER GOVERNMENT
The lack of regulation actually brings us to Mr. Smaller Government himself, Ronald Reagan, and his fed chairman, Mr. Greenspan, who convinced us that smaller was better. No need to regulate banks as had been done since the Depression and the Glass-Steagall Act of 1933. This is America, land of free markets! Let the markets decide! (Translation: Let Rich Republicans Decide)

Yes, this is America and so that means we have only ourselves to blame or thank for who we elect, the markets we create, and the consequences of our decisions. So if anyone is going to go back and blame Clinton for wanting more people to own homes, we must go back just a little further to Ronald Reagan.

Reagan ballooned the federal deficit to it’s largest amounts ever (to that point in time) after getting elected on the “government’s not the answer to the problem, government is the problem” fable. Clinton left office with a federal surplus which W proceeded to totally squander by giving it to the rich in the form of tax cuts. Remember, too, the invasion of Afghanistan and Iraq have never been accounted for in the federal budget. The piper isn’t even close to being paid when it comes to the federal deficit.

So who really is the party of fiscal responsibility? Make no mistake, Republicans talk a grass-roots, family values game but that’s a ruse intended – and seemingly working extremely well – to convince middle America that they are the Republican party core. Wrong. The wealthy is the real Republican party core. The religious-right, pro-life, Creationist, white-bread American is just the uniformed and ill-advised pawn in their game. They are easily convinced that so-called tax-and-spend liberals, job-stealing illegal immigrants, and unfair (meaning unregulated) foreign markets and labor practices are to blame for our troubles.

We only have ourselves to blame.

A FINAL THOUGHT ON CONSUMERISM, FOREIGN LABOR, AND OUR ECONOMY
When it comes to foreign and domestic markets and labor, we only need to look in the mirror. Consider the goods and services we consume, how that affects the economy, and what it means to domestic and overseas markets and societies, including China.

Any business is in business to do something profitably. Businesses who outsource everything possible to overseas markets like China do so in order to lower operating expenses and maximize profits on the goods and services they sell and we buy from them.

Hey, we don’t want government to tell them or us what we can and can’t do, right? No need to regulate business, right? This is America, land of the free and free markets! Let us as producers and consumers drive the market!

So if we as consumers….

  1. weren’t always encouraging businesses to lower costs by constantly demanding and buying cheaper and cheaper goods (the WalMart affect)
  2. were more willing to elect leaders who put the needs of the American middle class worker ahead of the corner office CEO maybe with proper tariffing and changes to NAFTA – George H.W. Bush’s baby, by the way, and
  3. stopped believing red herrings like illegal aliens taking all of the good paying jobs (yeah, like picking vegetables and raking lawns) thrown at us by right-wing news sources like Fox, Rush Limbaugh, Michael Savage and Quinn and Rose as the cause of our economic problems,then maybe we wouldn’t be in such a mess.

In a democracy, we have some power by virtue of our ballot. So long as we allow ourselves to be fooled into thinking that the Republican party in this day and age is anything but a party of the rich, we’ll keep going through cycles where they come to power every so often, make changes that only benefit the rich like deregulating markets and cutting taxes for the wealthy under the total lie of Reagan’s failed “smaller government” and “trickle-down economics” theories, and we’ll be stuck once again holding the short end of the stick.

It really is something to see – middle class Americans somehow thinking that Republicans are in our corner. I don’t get it. The past 3 Republican administrations – Reagan, Bush 41, and especially the last 8 years under W have proved that to me. Look at how W took Reagan’s failed philosophies – and the deficit – to heights unimaginable. When were we last really prospering? Wasn’t it under Clinton?

For now it seems the majority of Americans have awoken from the nightmare of Republican dogma and are at least willing to try something different. After all, you know the definition of insanity, right? – doing the same thing over and over and expecting different results.