The Super Heroes vs The Super PACs

The Men in Black kicked the Avengers’ butts last weekend at the box office. The Avengers and the Mibsters both kicked the aliens’ butts (or their biological  equivalent). Gigantic movie battles between innocent, minding-their-own-business Americans and evil-doing invaders intent on destroying our cities have become a Memorial Day tradition. And it’s always the grit and chutzpah of a handful of superheroic patriots that saves the country and the planet.

Why do Americans especially embrace these fantastical films of victory against seemingly invincible enemies during a holiday that recognizes those who have given their lives for their country? It’s probably a coincidence. After all, how many Americans celebrating Memorial Day actually know what it stands for, apart from shopping, barbequing and movie-going?

Not many, is my guess. One reason is that only one half of one percent of the U.S. population – that’s 0.5% – has been on active duty in the military at any point during the last ten years, according to the Pew Research center.  Only a quarter of Americans say they “closely follow” news of the wars in Iran and Afghanistan. About half told pollsters the wars “made little difference” in their lives and that neither was worth the cost. This is hardly surprising; in fact, it was a deliberate strategy by the nation’s leaders.

There was never the congressional Declaration of War that our Founders mandated, in the Constitution, to ensure that the decision had the support of a majority of the country. To avoid a national draft, which they believed would be massively unpopular, Bush Administration officials disastrously outsourced a huge chunk of the work of the two conflicts to private corporations like Halliburton and Blackwater (both have since changed their names).  And war itself increasingly became a sterile and distant affair: U.S. soldiers directed drone attacks from buildings on U.S. soil, using high-tech weaponry much like blockbuster video games.

There was nothing like the clarity of purpose or mission that arises when a galactic Hitler seeks to wipe out the species  - the kind of “live free or die” choice that led a united United States to enter World War II. We were threatened – that much we knew – but the rest of the details were shrouded in secrecy and overt lies.  The post 9/11 wars were under the radar for many – maybe most –Americans.

That’s bad news for our democracy.  Countries whose populations were disengaged from the wars conducted in their name have not fared well in history, beginning with the archetypal example: ancient Rome.  As pointed out by Cullen Murphy, that city’s infamous decline and fall bears a distressing similarity to the privatization, coarsened discourse and elite-driven political establishment that characterizes contemporary America. A sense of betrayal and powerlessness – felt most painfully over the last few years as a result of the Wall Street debacle and bailouts – was behind the Tea Party (until it got take over by corporate interests) and Occupy uprisings.

Thanks to the U.S. Supreme Court, the disenfranchisement of average Americans has only accelerated since the crash while a small class of the warrior elite has been elevated: the political consultants. Their mission: to manipulate the judgment of citizens as they attempt to exercise the right to vote.

Back in the day, political consultants were restrained by whatever boundaries were imposed by the candidates and elected officials they represented. The candidates, in turn, were bound by rules limiting how much money special interests could give them.

No more, reports the New York Times.

Ruling in the outrageous Citizens United case that corporations and their leaders have the same First Amendment rights as people, the Supreme Court has cut the tether between candidate and consultant. Now, practitioners of the dark arts of domestic poly-sci warfare can work directly for corporate funded Super PACs without having to worry about anyone’s sensibilities. “You don’t have kitchen cabinets made up of well-intentioned friends and neighbors who don’t know what they’re doing but eat up a lot of your time,” a Republican consultant told the Times. “Super PACs don’t have spouses.”

The Supreme Court has done away with the middleman – the candidate – and, perhaps inadvertently, torn away the modest cloak of legitimacy that the old campaign finance laws used to provide to a fundamentally corrupt system.  Now the corporations and malefactors of wealth exercise with zeal their First Amendment freedom to blast their political opponents into oblivion.

Looking for the Avengers? If we are going to preserve our democracy against this final assault, citizens are going to have to become the superheroes.

Harvey Column - 05/31/2012

With friends like these...

Who would squawk about giving California homeowners a little more protection against bankers, who have paid billions to settle charges of outright fraud in the foreclosure process?

Well, bankers of course.

You expect bankers to fight back when state officials take steps to rein in their illegal and improper practices.

That’s not a surprise.

Even though we bailed out the banks to help them survive, we have grown accustomed to their absolute devotion to their own interests at the expense of everybody else.

But why would an Obama administration federal regulator step in to interfere in a state’s business – on the banks’ behalf?

That’s what’s happened in California, where a proposal for a “homeowners’ bill of rights” by the state’s attorney general, Kamala Harris, has faced tough opposition from the bankers.

You would think that the Obama administration, if it were going to take a side, would want to be on the side of the state’s homeowners, not to mention Harris, who has been a co-chair of the president’s campaign and one of his strongest allies.

After all, President Obama, in his populist campaign mode, has paid strong lip service to homeowners and holding banks accountable. But that’s not what happened.

Instead, the general counsel of the Federal Home Financing Administration, Alfred Pollard, weighed in with a condescending letter to Democratic legislators fighting for the homeowners measure, warning that the legislation would “restrict mortgage credit and hamper necessary home seizures.”

Harris’s proposal sounds dramatic enough, a collection of six bills calling itself a “bill of rights.” But it’s actually a modest set of common-sense protections: for example, establishing civil penalties if banks continue their illegal practice of robo-signing in the foreclosure process, giving homeowners the right to challenge a foreclosure in court if banks don’t follow proper procedure, and prohibiting so-called “double-tracking,” in which banks foreclose while they’re negotiating a loan modification with the homeowner.

Banks have already promised to stop having their employees forge other people’s signatures on documents or verify that documents are accurate when in fact they haven’t even read them. The banks got off with barely a wrist slap for robo-signing and other foreclosure fraud in the recent “settlement” with state attorneys general and the feds. The settlement only costs the big banks $5 billion out of pocket while they negotiated another $20 billion in credits for taking a variety of remedial actions, some of which the banks were doing anyway – even without getting credit.

You might think that Pollard and his FHFA colleagues, who are responsible for overseeing Fannie Mae and Freddie Mac, might be more circumspect in lecturing others about screwing up the housing market.

During the housing bubble, Fannie and Freddie, which were originally set up by the government to support the housing market but went private in 1968, adopted all the bad behavior of the big banks, cooking its books, taking too much risk, throwing around their political muscle through lobbying and political contributions to stave off questions about their business shenanigans.

Then the government placed them in conservatorship, under the supervision of FHFA. Since the financial collapse, the agencies have not exactly put much muscle into helping homeowners facing foreclosure. The head of FHFA, a Bush Administration holdover named Ed DeMarco, has been particularly insistent that helping homeowners avoid foreclosure through principal reduction would be bad for taxpayers. But it turns out that in 2010, according to internal documents, Fannie Mae was about to launch a principal reduction program that its research showed said would save not only homes, as well as taxpayers hundreds of millions of dollars, before it was abruptly cancelled.

The principal reduction program was based on a model of “shared equity,” in which if the value of the home later rose, a homeowner would share any gains with the bank.

While the recent foreclosure fraud settlement with the big banks commits them to do some principal reduction, that agreement specifically excludes Fannie Mae and Freddie Mac.

A couple of Democratic congressman, Elijah Cummings of Maryland and John Tierney of Massachusetts, have written to DeMarco demanding an explanation.

“Based on the documents we have obtained, it appears that the shared equity principal reduction pilot program should have been implemented years ago, and the failure to do so may have resulted in unnecessary losses to U.S. taxpayers,” Cummings and Tierney wrote. “This was not merely a missed opportunity, but a conscious choice that appears to have been based on ideology rather than Fannie Mae's own data and analyses.”

Even for an administration that has been kowtowing to the banks from day one, FHFA’s failures, and its lame venture into California’s legislative process, represent a new low.

For a start, California legislators should ignore Pollard and his FHFA’s cronies lame advice. Even better, the president should pitch him and FHFA’s entire leadership out of the administration and replace them with people who know how to support the housing market, not just bankers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreclosures / Martin Column / President Barack Obama - 05/24/2012

Bipartisans, bankers and baloney

Along with protecting their profits, big banks also care deeply about getting revenge against those politicians who cross them.

That’s the message from the primary defeat of Sen. Richard Lugar, the veteran Indiana Republican who has been highly touted as one of the last of a vanishing breed of respectable bipartisan statesman-politicians.

Lugar, 80, was defeated by a tough-talking Tea Partier, Indiana state treasurer Richard Mourdock, who said his idea of compromise was bashing Democrats until they gave in.

While much of the media has blamed Lugar’s defeat on his willingness to work with Democrats, if you follow the money against Lugar, you’ll find other, familiar forces at work.

This was hardly a grassroots victory against the Washington status quo, unless by grassroots you mean the Financial Roundtable and the American Bankers Association.

As Politico and the Republic Report detailed, the attack on Lugar was funded by the Financial Services Roundtable and the American Bankers Association, along with Wall Street-backed anti-tax, anti-regulatory groups including Dick Armey’s FreedomWorks and the Club for Growth.

Even though Lugar opposed financial reform, Wall Street is still mad at him because he took the side of giant retailers like Target and Wal-Mart in another epic battle, over debit swipe fees.

The banks suffered a rare defeat in the Senate last year when it rejected a delay in implementing a rule that limited the amount banks could charge you to swipe your debit card, costing the banks about $16 billion. Lugar was one of the few Republicans who sided with the retailers to stand for election this year.

His defeat will no doubt serve as a useful example for legislators considering opposing Wall Street.

On key votes on bread and butter issues, Lugar the bipartisan voted against economic stimulus, and he favored extending unemployment benefits only if the Bush era tax cuts were extended.

I wouldn’t waste any tears for Lugar.

It’s only a matter of time until he lines up a lobbying deal, if he wants one. He can join his former Senate colleague from Indiana, Evan Bayh, a Democrat who was also celebrated as a great bipartisan.  After leaving the Senate gnashing his teeth over the increased partisan rancor, Bayh landed a sweet gig lobbying his former colleagues on behalf of the Chamber of Commerce.

If by bipartisan one means always ready to fight for corporate interests, big banks or the titans of retail, then both Lugar and Bayh fit the definition. But Lugar’s defeat is just the latest example of how the media and the Washington insiders persist in wringing their hands over the phony loss of bipartisanship while ignoring the much more compelling reality of corporations that wield way too much power in Washington at our expense.

 

 

 

 

Bipartisanship / Lobbying / Martin Column - 05/21/2012

Biggest Loser, Too Big to Fail Edition

Welcome to this week’s episode of the Biggest Loser, Too Big to Fail Bank edition!

Each week we tally up the bad behavior of a banker who took taxpayers’ money in the bailout, only to engage in more obnoxious antics calculated to hurt the very taxpayers whose generosity has guaranteed the bankers’ gazillion dollar annual compensation.

This week we’re featuring a surprise guest, a banker who, in the past, the press fawned over as one of the savviest Wall Street titans, who managed to actually enhance his reputation during and after the 2008 financial collapse.

Please welcome JPMorgan Chase CEO Jamie Dimon, whose bank is the biggest in the nation, with total assets of $2.3 trillion.

He’s not one of those CEOs who presides over a big bank that everybody assumes is a zombie, like Bank of America and Citibank.

No, Dimon and his bank actually made money. He was presumed to know what he was doing. Especially by President Obama, who welcomed him to the White House on numerous occasions.

And Dimon has distinguished himself as the most vocal opponent of bank regulation, which Dimon says could be bad, not just for him, but for America.

Dimon is tops in the public relations game – his reputation wasn’t tarnished even after federal authorities found that his bank was improperly foreclosing on the nation’s veterans and JPMorgan Chase had to pay $45 million two months ago to settle a lawsuit.

Dimon was still invited to the White House and fancy seminars where the attendees hung on his every word.

That was before Dimon admitted last week that one of his top traders had lost $2 billion on trades that were supposed to hedge against other risky bets that the banks’ traders were taking.

These were bets that were supposed to reduce the bank’s risks, not cost it $2 billion.

It’s just the latest evidence that not even the smartest banker, not even Jamie Dimon, who just a couple of weeks ago had dismissed warnings about the bets as a “tempest in a teapot,” has a clue as to how their own firm’s complicated financial engineering works.

Admittedly, the competition for too big to fail biggest loser is tough because the bailed-out bankers’ behavior has been so bad.

Determining the biggest winners is easy, however: the politicians and lobbyists who have collected millions in campaign contributions and lobbying fees from bankers who have successfully crippled efforts at real reform. JP Morgan Chase’s latest losses will no doubt reinvigorate the debate over financial reform, causing the banks to shovel yet more money to the politicians and lobbyists in their effort to make sure that the only true reform – breaking up the big banks, so they’re not too big to fail  – never happens.

Beyond the reality TV theatrics of the political debate, we know who the real losers are – the taxpayers who foot the bill and citizens who are shut out of political debate by the corporations who dominate it with their money.

President Obama and his administration like to brag that taxpayers are making a profit from big chunks of the bailout. But that PR covers up the real story on the bailout: the federal government spent trillions to make the too big to fail banks like JP Morgan Chase bigger and more powerful, not to rein them in.

As Charlie Geist, a Wall Street historian and professor at Manhattan College told Politico, “The guy in the street in 2008 and 2009 was worried about his or her deposits, and now it’s clear they should still be worried.”

 

 

 

 

 

 

 

Derivatives / Martin Column / Too Big To Fail - 05/16/2012

Identity Theft in the Matrix

Something weird occurred on my TV when I happened to catch a few minutes of the Madrid Tennis Open on Sunday. Whatever technology these stadiums use to provide constantly changing television advertisements along the sides of the court wasn’t working too well. Some of the furniture on the clay itself seemed to be dissociating on an atomic level. A chair looked as if it was disappearing in a shimmering blue cloud. It was like that moment in the movie The Matrix when the reality of the unreality becomes apparent to Neo – a house cat vanishes for a split second, then reappears.

The technical snafu made the match pretty hard to watch, so I reverted to the New York Times, where columnist Thomas Friedman happened to be expressing astonishment at the profound influence of corporate marketing values on American society. Few have written more enthusiastically about the spread of capitalism worldwide than Friedman, so it was surprising to hear him say he “had no idea” that famous authors, revered sports players and even public institutions have all bartered their identities for corporate cash.

Just then, Roger Federer won the match. “Watch this,” my wife said in a moment.  “He’s going to reach into his gym bag and pull out an expensive watch, so he’s wearing it when he gets the award.” Sure enough, with a bemused grin – I took it to be a guilty “ok, I have to do this” sort of look – Federer theatrically slipped his sweaty hand into the bag and slowly pulled out a gleaming Rolex, which he then slid onto his wrist.

I’m no slouch when it comes to tracking the commodification of our culture – a Ralph Nader spin-off, Commercial Alert, has been quietly raising the issue for years – but I’d never witnessed someone of Federer’s stature actually engage in a corporate sponsorship ritual, one which happens to be well known to tennis fans.

The impact of celebrity endorsements and the promotion of products in TV shows and films is more than just an idle curiosity. For many years, Americans were urged to close the gap between the lifestyle they aspired to – as displayed in the entertainment media – and the economic reality of their lives by borrowing on their homes and credit cards. This masked a gaping and painfully growing chasm that is now the topic of conversation only because Wall Street flushed the toilet on our economy a few years back.  Where once you too might have been able to pull a beautiful watch out of your duffel courtesy of a JP Morgan Chase credit card, that’s no longer possible for many.

Even more insidious than dictating our personal dreams and values is the corporate capture of our political identities. In that sense, the United States Supreme Court’s infamous decision in Citizens United symbolically acknowledges what had long ago become the Golden Rule of American democracy: those who have the gold, rule. By bestowing human rights upon corporate entities, and equating spending money to buy elections with freedom of speech, Citizens United locked in a system of legalized bribery that locks most Americans out of the electoral process that is our birthright.

Sure, we still have the right to vote. But the choices we are offered are usually determined by a political establishment mostly dominated by corporate money and a vast apparatus of election consultants, public relations hacks and lobbyists.

Every corporate dollar spent on candidates and elections pays an enormous return on the investment.  The Money Industry gave $5 billion to federal officials in the ten years leading up to the 2008 financial debacle, as we documentedin 2009 (PDF). The result: “bipartisan” decisions by lawmakers and the executive branch stripping away decades of legislation designed to protect America against lunatic speculation. Liberated, Wall Street gambled till it lost everything. Cost to American taxpayers: hundreds of trillions of dollars in bailouts, lost jobs, battered businesses, devastated communities – a Depression. Heads they win, tales you lose.

A recent study by academics at the University of Kansas examined how a particular federal tax break for multinational corporations became law, and what happened after that. They calculated that for every $1 spent on lobbying in favor of the tax break, the companies were spared $220 in taxes – a return of 22,000%.

Last week’s revelation that JP Morgan Chase had lost $2 billion through trading practices that are supposed to be illegal under the financial reform law passed by Congress in 2010 begged the question: how did they get away with it? Answer: JP Morgan Chase spent millions on lobbyists whose job was to weaken the law, and delay its implementation. The current draft of the federal regulations required to enforce a key provision of the law is a 298-page monstrosity; thanks to JP Morgan’s lawyers, it’s loaded with political booby traps and sabotaging IEDs that will utterly neuter the law, if it ever takes effect.

Mission accomplished.

With staggering results like these, it’s no wonder that the corruption of American politics is now an industry itself. The Times estimates its size at $6 billion a year, and reports that a series of mergers and acquisitions is creating a corporate lobbying conglomerate where the best and brightest – including retiring members of Congress – alight.

This is the Invisible Government that used to be the topic of novelists and conspiracy theorists. In the celebrity-driven entertainment Matrix, it’s easy to miss if you aren’t looking around and wondering what’s going on.

 

Harvey Column / Paul Volcker / Supreme Court / Too Big To Fail - 05/15/2012

What's the `worst CEO' worth?

Why did the nation’s largest pension fund take a strong stance against Citibank’s excessive CEO compensation, but then turn around and vote for Bank of America’s lesser, but still outrageous, pay plan?

The California pension fund, CalPERS, was among the 92 percent of shareholders who went along with Bank of America in an advisory vote on CEO compensation earlier this week. In Wednesday’s vote, CalPERs did vote for measures that would have required disclosure on B of A’s lobbying activities as well an independent review of the bank’s foreclosure actions.

While But Bank of America CEO Brian Moynihan faced noisy protests and pointed questions at the bank’s annual meeting in Charlotte, N.C,  both of those initiatives, like say on pay, were defeated.

In their nonbinding “say on pay” vote, Bank of America shareholders approved a $7 million 2011 pay package for Moynihan. Last month, 55 percent of Citibank’s shareholders, including CalPERS, voted against a 15 percent pay hike for their CEO, Vikram Pandit, who had been getting along on $1 a year in 2009 and 2010 while Citibank floundered.

CalPERS’ position this week is strangely at odds with its previous positions.

In the past, CalPERS has been has been particularly tough on Bank of America. In 2010, it cast an unusual vote against all of the bank’s directors, including then-CEO Ken Lewis.

Asked for comment on Wednesday’s Bank of America CalPERS vote, a spokesperson referred me to the pension board’s 79-page governing principles, specifically the provisions covering executive compensation. CalPERS declined to answer any questions about why the pension fund voted for Moynihan’s compensation fund, but against Citibank’s.

True, Moynihan’s pay is less ($7 million) than Pandit’s ($15 million), but that doesn’t make either of them acceptable, much less understandable, by anything but the tortured logic of the too big to fail, government-coddled banks.

To approve Moynihan’s pay, shareholders had to overlook mountains of evidence that the bank is on the wrong track. Back in October, the bank retreated on a scheme to soak its customers for a $5 a month fee on debit cards after President Obama blasted it. The bank, which Bloomberg News estimates received more than $1.5 billion in federal bailout aid, has repeatedly been the target of criticism for underperforming in voluntary government loan modification programs. Earlier this year, B of A was among the big banks that settled foreclosure fraud charges with the feds and states attorney general. Though it was touted as $25 billion settlement, it actually only cost the banks $5 billion. But the bank fraud it highlighted was real.

Richard Eskow of Campaign For America’s Future outlined Moynihan’s dark career trajectory, from B of A general counsel to head of its retail division to CEO, while the bank completed its disastrous $2.5 billion acquisition of slimy subprime lending king Countrywide. When Moynihan joined senior management the bank’s stock traded around $52 a share. Today it trades around $7 or $8 a share.

Tallying the eventual costs of the Countrywide acquisition, Eskow includes a massive $8.4 billion settlement with states over illegal behavior, $600 million to settle a class action suit,  $335 million to settle a discrimination suit and $50 to $55 million for its part of lawsuits against Countrywide’s former CEO.

One bank analyst, Michael Mayo, recently ranked the worst CEOs. Moynihan was at the top of the list (with Citibank’s Pandit not far behind). Mayo cited the stock slide along with the debit card fee debacle and the bank’s failure to stem its foreclosure fraud and mortgage servicing problems.

Eskow hits the nail on the head when he asks: By what standard does Moynihan still have a job, let alone a multimillion-dollar salary?

And by what standard does he merit a vote of confidence by CalPERS, which less than a month earlier had taken a strong stand against excessive pay for another failed bank executive, Pandit?

Especially after the pension fund’s chief investment fund officer, Joe Dear, vowed after the Citibank vote to get even more activist. “Excessive CEO pay is not in the interest of the shareowners and not in the interest of companies,” Dear told CNNMoney.

CalPERS has long been an advocate for improved corporate governance, but its credibility has sagged after it suffered staggering losses in the financial collapse and was caught in its own sleazy “pay to play” scandal.

CalPERS’ Bank of America’s vote leaves unanswered questions about the pension fund’s claims to increased activism. Did CalPERS single out Citibank because that was the only too-big-to-fail bank to fail its latest government stress test, as U.S News and World Report suggested?

Or could the vote have something to do with the confidential settlement last November of a lawsuit CalPERS and 15 other institutional investors filed against Bank of America? Could CalPERS officials have agreed to back off their previous hard line against the Bank of America board as part of a secret deal the public will never see?

Of course, we don’t know details – the settlement is sealed.

Was Citibank a publicity-grabbing one-off, or did the pension fund give Bank of America a bye? We’ll have to wait and see just exactly what CalPERS means by activism when it comes to challenging the pampered, powerful titans of the nation’s too big to fail banks.

For now, all we can do is paraphrase the classic film portraying of the lack of accountability of corrupt power, `Chinatown’:

“Forget it Jake, it’s Wall Street.”

 

 

 

 

Bank of America (BoA) / CalPERS / Citibank / Executive Pay / Martin Column - 05/11/2012

Different strokes for different protestors

Operating on very different pieces of turf, the Occupy movement and the budding shareholder revolt are putting the status quo on notice: no more business as usual.

With May Day marches across the country earlier this month, the occupiers signaled they’re not going away. They intend to keep taking public space, protesting and reminding the country what our democracy has lost in a takeover by corporate powers.

Meanwhile, corporate shareholders appeared to be slumbering in the wake of the financial crisis, lulled by soothing predictions about economic recovery and buoyed by a stock market recovery.

But taking advantage of an advisory vote granted them in the Dodd-Frank financial reform legislation, shareholders have recently taken highly publicized swipes at excessive compensation plans for CEOs at Citibank and British Petroleum and several smaller banks.

At Citibank, 55 percent of shareholders rejected the notion that a company whose shares dropped 45 percent over the past year, wiping out $60 billion in shareholder equity, owed its CEO a $15 million salary hike. Citibank’s board said it would carefully consider the shareholders’ concerns.

CEO compensation plans narrowly won approval at General Electric, where the value of the stock has fallen 45 percent over the past 5 years, as well as at insurance giant Cigna, but not without noisy protests. At Credit Suisse and Barclays, a sizeable minority of shareholder voted against their executives’ compensation packages.

And excessive compensation is not the only thing shareholders are upset about. Some Cigna shareholders also expressed their opposition to the $1.8 million Cigna spent lobbying against health care reform in 2009.

At Wellpoint and Aetna insurance companies, shareholders want company officials to improve disclosure of their political spending, after the Center for Political Accountability found that both companies’ disclosure policies "leave significant room for serious misrepresentation of the company's political spending through trade associations."

Four of Wellpoint’s directors who are standing for reelection also face unusual no vote campaigns because the company has failed to live up to earlier commitments to improve disclosures of their political spending.

To be sure, these actions represent only a small number of corporations so far; most shareholders are approving without a fight the executive pay plans proposed by the board of directors’ compensation committees.

But like the occupiers protesting in the public square, the shareholders at these major corporations have driven a very large, sharp stake into their turf, and these first, highly publicized steps toward more accountability and transparency are likely to inspire more like them.

Occupiers, with their horizontal leaderless anarchist principles and drum circles, and shareholders, with their focus on the bottom line, might not seem to share much other than a desire for more accountability and a sense that the system as it is, isn’t working. But both groups are equally shut out of this political season, with neither party doing anything but paying the slightest lip service to their issues.

The occupiers and the shareholders are also carrying an important message for the rest of us: democracy isn’t just a matter of walking in to the ballot box and pulling the lever for our team every four years and waiting for the politicians to fix our problems.

 

 

 

 

Martin Column / Occupy / Outrage - 05/09/2012

Free market follies

Now that the big-time media is wrapping up its commemoration of the 20th anniversary of the Los Angeles riots, it can get back to its real job: bird-dogging celebrities and cheerleading a “jobless recovery.”

It can get back to its regularly scheduled programming, reporting on the sale price of movie stars’ homes while ignoring the persistent and unpleasant economic and political realities in low-income neighborhoods like south Los Angeles where the riots ignited.

But it was a different story at a terrific conference last week at the University of Southern California called “Up From the Ashes,” sponsored by the school’s Program and Regional  Equity.

It focused on how activists responded to the riots, their accomplishments and defeats, sweet victories and bitter frustrations, and the hard work that remains.

While many gave credit to the Los Angeles police for reforming their approach to minority and low-income communities, on other issues the prognosis was far grimmer. By critical economic measures such as unemployment, availability of affordable housing  access to health care, and the percentage of its sons and daughters in prison, low-income Los Angeles is worse off today than it was in 1992.

At the conference, longtime public transit activist Eric Mann pointed out that as in many other things, Los Angeles has been ahead of its time in its starkly contrasting communities of wealth and poverty.

He also tracked the decline of the government as a problem-solver and the rise of the worship of the free market as the panacea for even the most complex issues.

Mann compared the response to the earlier 1967 Watts riots with the response 1992 Los Angeles riots.

After the earlier riots, the McCone Commission, which had been appointed to investigate, predicted that if poverty and housing issues weren’t addressed, the city would erupt again.

While the War on Poverty initially resulted in some government attention to those problems, it wasn’t sustained. Antipoverty programs dried up as politicians embraced their new philosophy that demonized government as the problem and idealizing the private sector as the solution.

After the 1992 riots, the recovery was left in private hands, specifically to the Orange County-based former baseball commissioner who had organized the 1984 Los Angeles Olympics, Peter Ueberroth. While Ueberroth obtained promises for corporate funding for recovery for south Los Angeles, Ueberroth and his corporate colleagues were clueless about the community they were trying to help and the social issues they were wading into. As a result they failed to delivery any real economic benefit or social change. Government also failed to come through with any serious programs, leaving the community stranded once again.

Any gains came, not from corporate or government benevolence, but from determined efforts from the grass-roots, within the community.

Listening at the conference with ears attuned to the 2008 financial collapse and its aftermath, I heard a direct link between the “let the free market fix it” response the 1992 Los Angeles riots and the run-up to the economic meltdown.

The media and the politicians saw the geniuses who ran the big financial firms as not being unable to do wrong, with no need for the traditional oversight put in place after bank speculation led to the Great Depression. This led to the bipartisanship repeal of the 1933 Glass-Steagall Act, which had kept federally-guaranteed banks from engaging in other risky financial businesses, as well as the dismantling of the remaining regulatory structure.

Despite the massive failures of the free market to either regulate itself or solve social problems, we’re still in thrall to this faulty philosophy that the free market should largely be left alone to take on tasks for which it is clearly not equipped.

One of the biggest reasons for this is that the media has itself been so lax in holding the champions of the free market, like Ueberroth and the too big to fail bank bankers, accountable for the consequences of their missteps, broken promises, and failures, preferring instead to cheer them on in their folly.

Martin Column - 05/01/2012