The Top 10 Reasons Not to Call Your Senator Now

I’m in beautiful Glenwood Springs, Colorado with wife Stacie and dog Billie in front of the fireplace in the lobby of the historic Hotel Colorado, which Teddy Roosevelt used as his western White House. There’s the Roosevelt Suite on the second floor, leading out to the grand balcony from which he addressed the masses.  Pictures and cartoons of him line the hallways.

I wish our president was more inspired by TR. He tackled the economic powers of his day—the railroads—with tough regulation, using existing antitrust laws to bust them up. Our political leaders don’t have the stomach for tough regulations or antitrust crackdown on too-big-to-fail financial institutions, let alone insisting on accountability for those bankers and politicians whose greed and carelessness actually caused the crash.

There’s wireless Internet, in the lobby of the Hotel Colorado. Barely. It’s so slow that I imagine overworked employees at Google receiving my page request, then sifting through voluminous files to find the page, then ambling back to their desks, where they stuff it into a pneumatic tube to my Macbook.

We’ve been talking to people who are weathering the economic storm. One waitress told us tourists used to line up four-deep at local bars. They’re still at the bars, but they’re not coming in the crowds they used to. Not a biggie for her: She’s third-generation Coloradoan. People here are used to a boom-and-bust economy: There was a silver crash in 1893; nearly a hundred years later, Black Sunday, May 2, 1982, Exxon pulled out and took a big chunk of the state’s economy with it.  She says her people are ranchers and live within their means: They save, pay cash and know how to live lean, when they have to.

The battle over financial reform is hot and heavy in the U.S. Senate. Looks like the best we’re going to get out of this president and Congress is a series of baby steps—as “Baseline Scenario’s” Simon Johnson describes them—that leave the status quo in place. But even these baby steps are better than the alternative: giving the bankers and their lobbyists a complete victory.

Contact your senators. Tell them you’re paying attention to financial reform. You’re keeping track of how they vote. Tell them not to water down financial reform any more. Ask them to support the Merkley-Levin amendment, the Volcker rule and Sen. Blanche Lincoln’s derivatives reform plan.

Unless, of course, you believe the following top-ten reasons for apathy, in which case, do nothing, and things will stay exactly as they are now:

One. You like it when banks gouge you on credit card and bank fees.

Two. You think the poor banks have suffered enough.

Three. You believe the banks’ propaganda that new proposals to rein in credit card fees will cost them $5 billion and cause them to extend less credit.

Four. You believe that the Obama administration’s toothless foreclosure prevention program has been a whopping success.

Five. You’re convinced that banks do need to continue the secret high-risk trading that caused disaster for the economy.

Six. You agree with the bailed-out bankers that their bonuses are none of our business.

Seven. You agree with the Federal Reserve that their secret handouts to banks shouldn’t be any of your business.

Eight. You agree with the bankers that they can protect consumers’ interests just fine without interference from any regulators.

Nine. You agree that the bailout really did work well for Main Street as well as Wall Street.

Ten. You’re convinced Lehman Brothers and Washington Mutual did nothing wrong when they cooked their books to hide their bad loans from investors and the public.

Around the Web: Typos and Tired Arguments

Did a typo or a technical glitch cause “a moment of uncontrolled selling” aggravating an already skittish stock market into a full-blown plunge? The old gray lady diplomatically labels it “an errant trade.”  But CNBC calls it a typo.

Meanwhile the fight over financial reform goes on. If some of it sounds hauntingly familiar, that’s because…it is.

Unearthing old arguments against corporate reforms of the past, columnist Michael Hiltzik finds opponents trotted out the same lame doomsday scenarios 75 years ago they’re offering today.

In 1933, writes Hiltzik in the Los Angeles Times, the American Bankers Association urged members to “fight…to the last ditch” an “unsound, unscientific, unjust and dangerous” proposal Congress was considering.

What kind of dangerous radical thing could those congressional crazies have been up to?

Federal deposit insurance.

Just like financial reforms of the 1930s, most corporate reforms, Hiltzik reminds us, almost always turn out to be positive for their industries.

At Baseline Scenario, James Kwak does a good job dismantling the arguments against auditing the Fed, the proposal which appears to have been the subject of a Senate compromise Thursday that would allow a substantial audit to go forward.

The Obama administration has been fighting the proposed audit arguing that it will “politicize” the Fed and that the ordinary flawed mortals who inhabit Congress don’t have the intellectual chops to oversee the Fed’s monetary titans. “The idea that monetary policy is too technical for Congress to understand, and therefore should be done in secret, I don’t buy,” Kwak writes. “So is, say, climate policy. That’s a complex scientific topic, of crucial importance to the future of our nation (and the human race), that is clearly beyond the ability of Congress to understand and discuss responsibly. But we don’t exempt the EPA from Congressional oversight.”

The Marx Brothers' Guide to Financial Reform

“Who you gonna believe, me or your own eyes?” asks brother Chico in the madcap classic “Duck Soup.”

It’s the middle of the night in the imaginary European nation of Freedonia. Chico has disguised himself in a scheme to convince a skeptical wealthy widow, the country’s major creditor, that he’s actually the country’s newly elected president (Groucho) to get her to hand over Freedonia’s top secret war plans.

The trouble is Chico’s Italian accent.

And Harpo. He’s disguised himself as Groucho too. And of course there’s Groucho. Three Grouchos. Who’s the real one?

Chico’s line reminds me of the not so funny antics of the Obama administration and our political leadership in their various efforts to convince us that financial system should be left intact and that reform should just be left up to the same regulators who colluded in creating the economic crisis and protecting big bankers’ interests.

That’s essentially what our leaders have proposed, wrapping themselves in the disguise of real reformers.

We may have been blinded for a while by the riches the bankers were offering us, but we can see clearly now what they were: a gaudy mirage.

If we didn’t get it when the economy crashed, we get it now, after we toted up the bill from the unsavory wreckage of Lehman Brothers and Washington Mutual, as well as the expense from the equally unappealing survival of Goldman-Sachs.

It’s plain to see that if any bank presidents lost their jobs they were handsomely compensated. None have been forced to face foreclosure or have had their unemployment or health insurance cut off.

The rest of us have a choice: believe our leaders or own eyes.

We understand what happened: the bankers got too big and powerful, got rid of all the rules, got greedy and brought the economy down – except for the part that kept churning out gargantuan bonuses to the financial titans.

We understand what we need to do, too: break up the big banks, curtail their power and wall off their gambling games from the economy the rest of us have to live in.

But the leadership that’s trying to control the debate seems hopelessly out of step with the country.

Not all the politicians are as clueless as the leaders. In fact, more than a dozen senators have signed on to what not long ago would have been considered a radical proposal – to audit the Federal Reserve. It already passed through the House by a wide margin.

This terrifies the administration, which doesn’t want any more details leaking out about the favors the Fed has been granting the big banks at public expense.

So the president’s chief of staff, former investment banker Rahm Emanuel, is working the phones. If the administration favored real reform, they’d be stiffening the politicians’ resolve against the massive bank lobbying intended to gut strong regulation. But instead, the president has sent Emanuel out to do the regulators’ bidding, to dissuade senators from voting for a Fed audit.

In the Senate, a handful of senators have proposed a stronger dose of reform than the administration and Democratic leadership have prescribed. But the Senate’s Democratic leaders are squeamish about even allowing their colleagues to debate these more robust proposals.

Meanwhile, the Republican leadership seems to be getting inspiration from the same Marx Brothers’ movie they’ve been glued to since Obama got elected –  “Horse Feathers.” Rep. John Boehner and Sen. Mitch McConnell may not have any ideas of their own but they’ve managed to perfectly capture the spirit of the lead character, Samuel Quincy Wagstaffe (played by Groucho) in his opening number, “Whatever It Is, I’m Against It.”

The Marx Brothers’ wit and wisdom never go out of style but they’re especially timely now. They began their film careers satirizing the hysteria surrounding a real estate bubble: the Florida land boom in “Cocoanuts” in 1929. “You can get any kind of a house you want,” Groucho assures prospective buyers as he auctions off some land of dubious value. “You can even get stucco.  Oh, how you can get stuck-o.”

While he poked fun at speculative investing, in real life Groucho was also a victim. He lost his savings in the 1929 crash. “Some of the people I know lost millions,” he quipped bitterly in his autobiography. “I was luckier. All I lost was two hundred and forty thousand dollars. I would have lost more, but that was all the money I had.”

Quotable: Martha Roper

"One of the biggest concerns about this (financial reform) legislation, which we support, it relies on its success on regulators to do, effectively, what they did very poorly in the run up to this crisis."

Barbara Roper, director of investor protection at the Consumer Federation of America

F**king Grandmothers, Widows and Orphans

“They’re fucking taking all the money back from you guys? All the money you guys stole from those poor grandmothers in California?”

"Yeah, Grandma Millie man. But she’s the one who couldn’t figure out how to fucking vote on the butterfly ballot."[Laughing from both sides]

"Yeah, now she wants her fucking money back for all the power you've charged right up, jammed right up her ass for fucking $250 a megawatt hour."

– Transcript of two Enron traders discussing the blackouts in California caused by the company’s manipulation of electricity prices in 2000.

“I’ve managed to sell a few Abacus bonds to widows and orphans that I ran into at the airport….”

– Email from Fabrice Tourre, Goldman Sachs trader, joking about derivatives he was selling that later proved worthless.

I have a job I really love – fighting injustice – so I always thought that being a Wall Street trader was just about as boring and inconsequential a job as you could think of. I mean, how enjoyable could it be to sit in front of a computer all day, doing nothing but moving an artificial construct around – “a ‘thing,’ which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price'" as the Goldman dealer described the derivatives he was peddling.

But it seems these guys were able to have a few laughs after all. Turns out the money ain’t bad either.

It would all be very amusing if their antics – “God’s work,” as Goldman’s CEO Lloyd Blankfein described it not long ago – hadn’t cost the country trillions of dollars, and many Americans their jobs, homes and pensions.

Not so funny.

Something is seriously wrong when the pursuit of wealth unabashedly becomes the preeminent aspiration of a culture. And when those who succeed in obtaining vast riches and privilege have nothing but disdain for the rest of the nation, and aren’t a bit embarrassed to say so.

The financial collapse was not an isolated, once in a century deviation. During the 1990’s, Enron and other energy companies, California’s public utilities and the Chamber of Commerce got together and, with the aid of a few million dollars in campaign contributions, got the California Legislature to deregulate electricity rates. Wall Street loved the idea. As soon as the law took effect, in late 2000, the traders jumped in and engineered phony shortages that ultimately cost California taxpayers $70 billion. We’ll be paying off the debt from that debacle for another twenty years.

With hindsight, it is clear that the California energy crisis was merely a forerunner of the current financial collapse. And I’ve noted the disturbing similarities between how Governor Gray Davis and President Obama responded to an emergency not of their own making. As I pointed out in “The Smartest Guys in the Room,” an action movie figure is the Governor of California today as a result.

Two crises in the same decade. Both the product of avarice. How could we let that happen?

9/11 had something to do with it. For most of the years that followed, the American people were told that our greatest enemy lived in a cave half way around the world. That was wrong, as it was eighty years ago, when in the midst of the Great Depression President Franklin Roosevelt told Americans, “our enemies of today are the forces of privilege and greed within our own borders.”

We now know that the enemies of American consumers and taxpayers were sitting in front of multiple computer screens by day, living in palaces and yachts and on their own private islands. Their weapons were pieces of paper that were backed by other pieces of paper that were backed by packages of mortgages, student loans and credit card debt, the complexity and value of which no one understood.

The people who were supposed to defend us against financial mayhem were overtly or covertly working for our enemies. They betrayed us, as we have painfully documented, and whether it was a few million to California lawmakers or $5 billion over ten years to Washington, it all came down to money.

The Republicans rail against the Democrats. The Tea Partiers rail against both. But where's the debate over the culture of greed that is eroding our values, not to mention our strength as a nation? When will our universities and religious institutions weigh in? When the Times of London asked Goldman’s Blankfein if it were “possible to make too much money,” he replied: ““Is it possible to have too much ambition? Is it possible to be too successful?” My answer to those questions is “yes.” What's your answer?