Don't Let the Bad Guys Get Away!

Hollywood loves a good chase. Last night at the Oscars, Tinsel Town sent a strong message to the rest of the country – the bad guys are getting away, and the cops aren’t even on their trail.

For a brief instant the Obama administration’s sorry efforts in holding bankers accountable for the financial collapse took center stage at, of all places, the Academy Awards.

Accepting his Oscar for “Inside Job,” his documentary about the financial collapse, Charles Ferguson used the opportunity to remind the audience of millions that not a single banker had gone to prison for fraud.

Ferguson was saying what the mainstream media has deemed a non-story, following President Obama’s lead in downplaying accountability while highlighting evidence of economic recovery.

But Ferguson joins a handful of prominent critics, including Bill Black, Simon Johnson, former Sen. Ted Kaufman, Dean Baker and Matt Stoller, who have been sending the same message in a variety of less prominent venues.

Meanwhile the president, far from insisting that his prosecutors develop fraud cases against top bankers, appoints them to top positions in his administration.

Typical is this recent column from the New York Times oped columnist Joe Nocera, who pooh-poohs the criminal aspects of the financial meltdown, blaming it on widespread “mania.”

Make no mistake; these are hard cases to make. In the 90s I covered the prosecution of savings and loan magnate Charles Keating, the poster child for bad behavior and political shenanigans for that earlier banking fiasco that also followed a rash of deregulation. Keating was convicted in both state and federal court. Though the convictions were overturned, Keating did serve four and a half years of his five-year state sentence.

Good prosecutors don't mind tough cases. They enjoy the challenge. But their bosses set their priorities and have to give them the support they need.

The Obama administration is barely even trying, afraid of alienating the bankers it’s trying to court. The cases that have been brought are either minor sideshows or they’ve been mishandled.

A local prosecutor told me that federal authorities have shown no interest in the painstaking work of building serious cases against bank executives, which would involve authorities going after minor players such as mortgage brokers, and working their way up the chain of responsibility.

In Inside Job, former New York state attorney general Eliot Spitzer has a suggestion for prosecutors – do unto the bankers what the prosecutors did unto him: go through their credit card receipts looking for evidence of illicit activity, like paying for high-priced hookers. Bust the bankers for their bad personal behavior and then obtain their cooperation in investigating financial abuse.

It may work; it may not. But at least prosecutors wouldn’t be sitting on their hands. They’d be doing their jobs – aggressively going after the bad guys.

 

 

Around the Web / Martin Column / Uncategorized - 02/28/2011

From Memphis to Madison

Last month I wrote about Martin Luther King’s last campaign, joining with Memphis sanitation workers to support their right to organize.

King was brought to Memphis by a local of the same union targeted more than 30 years later by Wisconsin’s governor, the American Federation of State, County and Municipal Employees. That’s where he died, murdered by an assassin’s bullet.

Amy Goodman, writing in Truthdig, suggested King’s spirit hovers over the demonstrations in Madison, which were sparked by the Wisconsin governor’s efforts to take away public workers’ collective bargaining rights.

The parallel is a potent one: both the mayor of Memphis and the governor of Wisconsin gained notoriety taking a tough line, refusing to negotiate.

One of the most striking aspects of the coverage of the demonstrations is the stark contrast between how the mainstream media talk about the showdown in Madison and how the demonstrators in the street talk about it. The media talks about budget deficits, politics and pension costs.

Ask the demonstrators why they’re in the street and they talk about fundamental unfairness – how workers and poor people have to sacrifice to solve the state’s budget crises while bankers who caused the financial crises that led to the state budget crisis continue to thrive without ever being asked to sacrifice.

Jane Hamsher, in Firedoglake, reminds us again how differently contracts that impact bankers are treated from those that impact working people. Remember those outrageous bankers’ bonuses? Those couldn’t be changed, we were told, because we are “a country of laws.”

But pensions for workers? Hey, we have a budget deficit to deal with!

Lots of people don’t have much connection or sympathy for unions, though the battles of union members contributed strongly to the development of the American middle class. Most people no longer have a grasp of that history.

That’s less true in Wisconsin, with its own long history of bitter labor struggles, full of many zigs and zags, ups and downs. The people there have less trouble connecting the struggles of labor unions to the well-being of the middle class.

More than 100 years ago, mill owners in Oshkosh crushed a strike and then had the leaders of the strike charged with conspiracy in an effort to crush the union. The workers brought in the famed firebrand trial lawyer Clarence Darrow to defend them.

In his closing statement, Darrow unleashed his full rhetorical arsenal. But his statement resonates with King’s Memphis campaign as much as it does in Madison, and helps put them in perspective. The case, Darrow insisted, was “but an episode in the great battle for human liberty, a battle which was commenced when the tyranny and oppression of man first caused him to impose upon his fellows and which will not end so long as the children of one father shall be compelled to toil to support the children of another in luxury and ease.”

Financial Crisis / Martin Column - 02/25/2011

Going Without Heat For Goldman-Sachs

With all the trillions tossed around in the government’s efforts to prop up the big banks, a $2.9 billion taxpayer-funded windfall to Goldman-Sachs might not sound like that big a deal.

But imagine if we still had that $2.9 billion, if it was still in the federal coffers and not in the pockets of Goldman bankers.

Maybe President Obama wouldn’t feel the need to cut off aid for poor people to help pay for heating oil through the cold winter – that $2.9 billion would more than pay for the proposed cuts.

Maybe you’re not in favor of helping poor people stay warm in the winter.

How about space travel?

That $2.9 billion could pay for nearly a year’s worth of research on manned space travel, which is also under threat.

But what did we taxpayers get from this generosity to Goldman Sachs?

Absolutely nothing. Worse than that, we rewarded extremely bad behavior.

The $2.9 billion payment was arranged by federal authorities as part of what they have described as their emergency efforts to salvage the financial system in the wake of the financial collapse brought on by the bankers’ greed, recklessness and fraud, enabled by regulators’ laxity.

The Federal Reserve, which was supposed to be overseeing this massive giveaway to the banks, contends it didn’t intend to give the windfall to Goldman-Sachs bankers. It was just $2.9 billion that got away from them in their hurry to fill the bankers’ pockets with our cash- I mean- save the economy. McClatchy News Service, using bland journalism-speak, calls it a “potentially huge regulatory omission.”

Goldman hit the jackpot on our bailout of AIG, in which taxpayers compensated the firm 100 cents on the dollar for bad proprietary trades. That means Goldman gambled with its own money, which it is entirely entitled to do.

But when they lose their money, as the old blues song says, they should “learn to lose.”

Lucky for Goldman, we’re there to pick them up, dust them off and wish them well, no questions asked.

Just how much longer are we going to allow our public officials, Republican and Democrat, to use our money to foot the bill for these deadbeats’ bad gambling debts?

Just how many people are going to have to go cold before we cut Goldman off?

AIG / Around the Web / Federal Reserve / Financial Crisis / Goldman-Sachs / Martin Column / Outrage / President Barack Obama / Too Big To Fail - 02/18/2011

Obama Visits the Nasty Neighbor

President Obama paid a call on the U.S. Chamber of Commerce a few days ago. No organization has done more to obstruct and derail the president's policy agenda: on behalf of the massive industries that fund its $200 million budget, the Chamber fiercely opposed health care reform, financial reform, the Consumer Financial Protection Bureau, environmental protection, and consumer access to the courts, often at the expense of small businesses.  Last year, it killed a bill in the Senate that would have stripped big business of tax breaks when they outsource American jobs to other countries. Its litigation shop, lavishly supported by a who's who of corporate defendants in civil and criminal matters, has been remarkably successful in protecting big business in cases before the U.S. Supreme Court.  The U.S. Chamber is a highly partisan operation that will never cede an inch of ground to the President or his party.

Still, it wasn’t so much that Obama went to Chamber, or what he said when he got there, that bothered me. It was that he walked there from the White House.

The Chamber's headquarters is only three tenths of a mile from 1600 Pennsylvania Avenue, a five minute stroll across Lafayette Park. Most Americans would never consider taking the car (except maybe Angelenos).

But when the President rolls, dozens of vehicles, from ambulances and TV trucks to communications and heavily armed Secret Service vans, go with him. It's spectacle, but, as President Reagan understood, the motorcade is a potent symbol of the power and majesty of the presidency.

Going on foot to the headquarters of corporate America, Obama surrendered not merely the trappings of power but, inescapably, a measure of the dignity of his office.

A year ago, Obama hoofed it back to the White House from a speech at the Chamber. That was right after his annual physical, and Obama joked that he needed to walk off some of his cholesterol. More importantly, that was before the mid-term elections, when the President’s party got walloped, thanks in no small part to the $31.7 million the Chamber spent around the nation, 93% of which went to elect Republicans.

His latest visit wasn't exactly "hat in hand," but by the President's own reckoning it was pretty close: “I'm here in the interest of being more neighborly," Obama told his hosts. "Maybe if we had brought over a fruitcake when I first moved in, we would have gotten off to a better start.”

"I'm going to make up for it," the President promised. Some of us think he's already done plenty for big business, and not quite so much for average Americans, most of whom are struggling to survive the aftermath of the debacle on Wall Street.

Mr. Obama was careful not to completely prostrate himself before the Chamber's bigwigs. But every remark that could be considered a point of disagreement was tempered with a nod to the Chamber’s ideology. The President defended health care reform, but instead of discussing the human toll of the private insurance mess, explained that it “made our entire economy less competitive.” He warned that “the perils of too much regulation are matched by the dangers of too little,” referring to the financial crisis, but did not discuss lost jobs or homes. Instead he said, “the absence of sound rules of the road was hardly good for business.” Invoking one of John F. Kennedy’s most memorable speeches, Obama said, “as we work with you to make America a better place to do business, ask yourselves what you can do for America.” But the man who appeared before the Chamber conceived of his job far differently than he did when he asked Americans for it in 2008:  “the final responsibility of government,” President Obama told the Chamber audience, is “breaking down barriers that stand in the way of your success.”

This week’s stroll was part of the President’s Chamber charm campaign, which began in earnest with the State of the Union speech in January, when the President seemed to declare the recession over because  “the stock market has come roaring back” and “corporate profits are up.”

For one in five Americans still out of work, for the one in four homeowners whose homes are worth less than the amount they owe on their mortgages, that was a painful moment reminiscent of George Bush’s “mission accomplished” speech back in 2003 about the Iraq War. Obama spent the rest of the State of the Union on a combination of platitudes and pandering to his opponents, pledging among other things to get rid of unnecessary government regulations - one of the Chamber's perennial priorities.

There are plenty of other places the president could have gone if he was in the mood for an outing. The national headquarters of the AFL-CIO is only a few steps away from the Chamber, but he has never made that trip, as the California Nurses Association pointed out. Sadly, that would not be as controversial a venue as the President might fear: the AFL issued a joint press release with the Chamber praising the president’s State of the Union speech. Still, a visit from the president would have made a statement to the nation about the role working women and men play in what is known as the "real" economy (as opposed to Wall Street and the Money Industry). A fairly straightforward jog down Pennsylvania Avenue would have taken Mr. Obama to Consumer Watchdog's office on Capitol Hill.

We'll be watching where the President wanders to next. If you know what you are doing, and are clear about where you want to go, navigating the nation's capital isn't hard. But for newcomers who don't, it's very easy to get lost in D.C.

Harvey Column / Outrage / Uncategorized - 02/11/2011

Phony Moderates, Real Power

Beware wolves dressed in moderates’ clothing.

Especially the “fresh thinking” as gussied up by the group calling itself “Third Way,” which tries to put a genteel, highbrow facade on its advocacy for increasing austerity and financial insecurity for the majority of Americans.

Digging beneath the sunny platitudes about promoting growth, you will find that the organization is chock full of high finance types and their political servants, so it’s no surprise that they’re more interested in rethinking what they like to belittle as entitlements and boosting too big-to fail banks than they are in raising questions about the financial system.

And they’re not laying down these proposals just to hear themselves talk.

These people have real power to set the terms of the debate and strongly influence decision-makers.

The most obvious example is President Obama’s new chief of staff, Bill Daley, the former top official of J.P. Morgan who sits on Third Way’s board.

He’s just the latest in a string of  bad appointments the president has made to oversee the nation's economy, from Tim Geithner and Larry Summers to Gene Sperling, the Goldman-Sachs alum who fought for financial deregulation in the Clinton White House, who was recently appointed to replace Summers on the Council of Economic Advisers. Then there's Jeffrey Immelt, GE’s CEO the outsourcing, plant-shutting ace who Obama put in charge of reducing the unemployment rate.

For his part, Daley seems to have earned his job as the president’s chief adviser by fighting against financial reform, especially from the Consumer Financial Protection Bureau.

The mainstream media has worked hard to foster the idea of centrism, with Third Way as a prime proponent of “moderate ideas.”

But there’s nothing moderate about the continuing unhealthy influence of corporate America over our political process, fostering policies that are turning us into something more like a Third World country polarized between haves and have nots than the land of opportunity for all.

There’s nothing moderate about the fear-driven wealth and power grab, otherwise known as the federal bailout, that entrenched the wealth built for a select few in the years of the bubble economy, while it increased economic insecurity for the rest of us. As Neil Barofsky, TARP’s inspector-general, pointed out in his most recent report, it also entrenched the political and financial clout of “too big to fail” financial institutions.

There’s nothing moderate about the austerity agenda of shared sacrifice which consists of cuts to Social Security, Medicare and education.

There’s nothing moderate about the attack on the economic system that was built in the wake of the Great Depression and World War II, which combined the power of the free market with a system of regulation and safety nets. That attack, with its intellectual underpinnings in the work of the economist Milton Friedman, was launched in the 1980s and has been carried forward by politicians of both parties.

Meanwhile, two of the most impassioned politicians standing up to that attack, from opposite ends of the spectrum, would probably be characterized by the mainstream media as extremist: Sen. Bernie Sanders, the independent socialist from Vermont, and Rep. Ron Paul, the libertarian from  Texas. Those two men, who would probably find much to disagree on, worked together to pass a bill to audit the highly secretive activities of the Federal Reserve during the bailout.

You may or may not agree with Sanders or Paul either, but they aren’t afraid to challenge a status quo which props up the powerful while undermining the powerless.

You can scour Third Way’s materials and you won’t find anything that challenges the risky practices of financial institutions that wrecked our economy. You won’t find anything that challenges the power equation that props up the status quo. Behind its rhetoric of moderation, Third Way knows which side it’s on.

Consumer Financial Protection Agency / Financial Reform Legislation / President Barack Obama - 02/08/2011

The President's Odd Jobs Choice

About the only the job that Jeffrey Immelt would be less qualified for than jobs czar would be to lead a crackdown on the influence of big money lobbyists.

Oh wait- there is no crackdown on lobbying.

So Immelt, the CEO of General Electric, will have to make do with the job the president has given him as head of the administration’s reconfigured outside economic advisory council, which is supposed to focus on job creation.

I’ve written before about G.E. as a prime example of how major corporations benefited from the bailout without exhibiting any gratitude to taxpayers.

To say that Immelt is a weird choice for a job creation initiative is an understatement.

Under Immelt’s stewardship, G.E. has shredded thousands of jobs in the U.S. while outsourcing many jobs to India and China. In the years before the financial collapse, G.E. focused on building up its enormous credit operation, which melted down under the weight of bad loans along with the rest of the financial sector. If not for the generosity of taxpayers, who gave G.E. more than  $16 billion in low-interest loans to keep it afloat, Immelt himself probably wouldn’t have a job. In 2008, Forbes named Immelt one of the U.S. most overpaid executives.

His company has engaged in economic blackmail, threatening the state of Massachusetts that G.E. would close plants if state officials didn’t cough up tax breaks. It’s true that Immelt’s GE has embraced green technology – but only wherever there is a substantial government subsidy involved.

Meanwhile, GE is spending more than any other firm on lobbying, while it pays little or no taxes.

If Immelt has had any previous innovative ideas about substantially reducing unemployment, he’s kept them to himself. This is the person our president chooses to lead his jobs effort? For Immelt and other corporate and financial titans, the “too big to fail” bubble has never really burst. They’re continuing to rake in profits and shape government policies in their own interests, while the majority who don’t have access to power are shut out from financial security as well as political influence. Rather than challenging this unequal equation, our president has chosen to try to climb into the bubble himself.

Around the Web / Executive Pay / Martin Column / Too Big To Fail - 02/02/2011