The President Aims For the Skyboxes

I keep telling myself I’m going to stop picking on President Obama and his administration because I don’t want to sound like a broken record.

One reader even suggested I might even be giving comfort to the Republicans.

Which, believe me, is not my intention.

But then the president and his people do something so clueless it seems to demand attention.

The latest example is the news that his campaign is contemplating moving the final extravaganza of the Democratic Party convention this summer in Charlotte, Bank of America’s corporate headquarters, to a stadium named for the country’s largest too big to fail bailed out bank.

You know, the one that wanted to charge its customers to use their debit cards, before the huge public outcry stopped them. Even the president slammed the bank’s debit card debacle. I wrote about some of the bank’s numerous other fiascoes here.

Now, the president and his campaign need to switch to the B of A stadium, according to the president’s people, because they need more luxury skyboxes for their big-money donors.

Remember when President Obama stirred the nation on election night in 2008? Speaking before a crowd of 240,000 in a public park in Chicago as well as a huge televised audience, Obama assured the country that “change had come to America.”

In 2008, the president spoke in Grant Park, which has been public space since the 1840s. Bank of America Park is an NFL stadium, home of the Carolina Panthers. They sell the naming rights for millions of dollars a year.  Local residents call it the BofA, or the Vault. Before the name belonged to Bank of America it belonged to the cell phone company Ericsson.

Imagine what a different impression the speech would have made if the president gave it surrounded by advertisements for the country’s banks.

We might have been better prepared for his economic policies if he had. The president has gone from shooting for the stars that night in Grant Park to aiming for the skyboxes.

I’m sure the president’s people will make sure that there are no actual advertisements on display while he speaks. But the symbolism, or optics, couldn’t be more powerful.

If the president and his party want to perform a public service, they should arrange to have the amount Bank of America, has contributed to each of the presidential candidates and their parties up on the scoreboard, along with the amount of bailout money, low-interest loans and loan buyouts the bank received from taxpayers.

If there was room, the party could display the names of its top donors.

If the BofA donations were displayed today, you might wonder why the president didn’t find somebody else’s stadium to give his speech from.

So far, the bank has forked over $126,500 to Romney and a measly $39,024 to the president.

But don’t cry for the president and his party. I’m sure they’ll more than make up the difference in the skyboxes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank of America (BoA) / Martin Column / President Barack Obama - 01/13/2012

Where’s Our Bailout? (Redux)

Between August 2007 and April 2010, the U.S. Federal Reserve handed out up to $1.2 trillion in public money to banks and other companies in the form of short-term loans to help them cope with cash flow problems, according to a recent report by the Bloomberg news service. In addition to U.S. banks and speculators, big bucks went to financial institutions owned by foreign governments; domestic firms like Ford and G.E. as well as Toyota and Mitsui and a German real estate investment firm.

While American taxpayers kept big businesses all over the planet alive, no such loans are available to taxpayers to cover their own personal cash-flow problems, including not being able to pay their mortgages, monthly bills, put food on their tables or a few holiday presents under the tree.

New figures, ironically also issued by the Federal Reserve, show how much help $1.2 trillion could be – if put in the hands of Americans. According to the Fed, the total amount of all money Americans owed on their credit cards as of last September was $693 billion. All of that could be paid off – in full – leaving another $500 billion, say, to help people avoid foreclosures or give every consumer in the United States a hefty tax cut.

Imagine the “stimulus effect” on our economy of paying off every credit card in the nation.

Although the Fed has portrayed the bailouts as the only way to keep money flowing in the economy, the Money Industry has yet to open its spigot and expand lending. Instead, they’ve used our dollars mostly to inflate CEOs’ executive salaries and pay themselves even more ridiculous bonuses.

Zeroing out America’s credit cards would solve that problem instantly. The credit card companies would get the money, of course, but Americans could start fresh and begin investing in their families, their businesses and their local economies.

Unfortunately, our country’s leadership owes its allegiance to the multi-national mega-corporations that grease the system with billions of dollars in campaign contributions. Wall Street’s “investment” in Washington caused the financial depression we are in today, and its no wonder that Washington’s attention is focused so narrowly on the welfare of the wealthy and large corporations. In fact, with its infamous decision equating corporations to human beings, the United States Supreme Court has turned the corruption of our democracy by money into a principle of our Constitution. Until we change that, Americans will be second class citizens in a country controlled by wealth and power.

 

Citizens United / Foreclosure / Harvey Column / Outrage / Supreme Court / TARP - 01/11/2012

The Lawyer With the Dragon Tattoo

This year’s most fearsome movie heroine is Lisbeth Sander, the hacker vigilante who outwits corporate and political evildoers with her superior investigatory skills, not to mention some kickboxing and the deft use of a taser. “The Girl With the Dragon Tattoo” smashes and hacks her way through the government officials, business executives and journalists that comprise Sweden’s lazy and corrupt Establishment. They do everything they can to stop her, but – I’m about to give away the ending – Sander ultimately triumphs, exposing decades-long corporate and government conspiracies.

Elizabeth Warren shares none of Sanders’ characteristics – except an exceptional intellect – ­but when it comes to inspiring fear and loathing among the denizens of Washington and Wall Street, she is every inch as frightening, as has been pointed out over the last few days in profiles and posts across the mediascape.

Warren, a bankruptcy professor at Harvard Law, long criticized the practices of America’s banks and credit card companies in law reviews and academic pieces. In 2005, when the financial industry was lobbying Congress to make it harder for the average American to declare bankruptcy, Warren penned a landmark analysis that concluded that most Americans sought bankruptcy protection not because they were freeloaders but because they could no longer afford to pay their medical bills. Long before the current crash, Warren proposed the establishment of a federal agency to protect consumers against credit card tricks and other financial abuses.

In November 2008, in a rare example of a perfect congressional appointment, Senate President Harry Reid put her in charge of the congressional task force monitoring how the $700 billion in taxpayers' bailout money was spent. She has demanded answers to the same question we ask here: “where did the money go?”  The results of her investigations, which can be found here, pull no punches.

Back in 2008, no one could have expected that Congress would create a financial consumer watchdog agency of the kind Warren advocated for years.  But her powerful and outspoken performance as chair of the bailout oversight panel has made her the obvious and only credible candidate to head the new Consumer Financial Protection Bureau created by the otherwise innocuous financial “reform” legislation Congress passed a few weeks ago.

Which, of course, has got Wall Street fired up, members of Congress tied in knots and the White House cornered. Unlike the Byzantine complexities of the financial swindles and the ostensible legislative “solutions,” none of which garnered public attention much less support, the question of whether the President will appoint a skilled lawyer/consumer advocate to protect consumers, or whether he will instead choose a Wall Street insider as he did when he appointed Treasury Secretary Geithner and White House economic advisor Larry Summers, is one the public and press can easily grasp.

The appointment raises the kind of simple and straightforward “whose side is he really on?” question that Obama has so far been able to soft peddle, though he unceremoniously surrendered on the public option in the health care bill and on “too big to fail” banks in the financial reform bill, to name just a few instances of his unilateral disarmament.

Make no mistake: Warren is a highly sophisticated lawyer that knows all the tricks of the financial industry and how to use the powers of government to stop them. This expertise will be essential. I wrote a ballot proposition, approved by California voters in 1988, that regulates the insurance industry. Having spent the last twenty-two years defending it against incessant lawsuits by industry lawyers and not infrequent efforts of elected state officials to hobble it, I can tell you that few decision-makers in the federal government have the technical skills and expertise to go head to head against the battalions of lawyering orcs deployed by big financial firms. Warren does.

Which brings us back to the fascinating spectacle of the hypocritical Washington establishment trying to grapple with her candidacy. She is, literally, made for the job, and a spontaneous grassroots campaign for her appointment is mounting around the country. But the politicians, obeying their paymasters on Wall Street, are trying to figure out a strategy to sabotage her nomination. It’s almost comic to behold. Republicans should be hailing Warren as a savior of beleaguered taxpayers, but one of their Senate leaders said that her tenure as chair of the bailout watchdog was “marked with ‘controversy”” and implied that Warren doesn’t have the necessary qualifications.

It’s the same for some Dems: Senate Finance Committee Chair Chris Dodd, who had never met a financial “innovation” (or industry lobbyist) he didn’t embrace until the whole rotten system collapsed two years ago, damned Warren with faint praise, then suggested she couldn’t be confirmed. He floated the name of FDIC Chair Sheila Bair, but she said no thanks.

Nor has the Obama administrationt been particularly supportive. Two weeks ago, Treasury Secretary Geithner was forced to dispel rumors that he is opposed to Warren by mouthing some platitudes about how “capable” and “effective” she would be in the post. A White House spokesperson told reporters, “We’ve got many good candidates. I know that the president will look at this job and the several other jobs that are created as part of this legislation and make an announcement.”

Warren’s appointment could be one of the few meaningful victories for consumers in the aftermath of the Wall Street deregulation disaster. She is not your typical accommodating political appointee. She does not appear likely to “play ball” with Team Obama or anyone else inside the Beltway when it comes to protecting consumers against the pillaging financial industry. The White House is well aware that once appointed, she would be very hard to fire, especially for doing her job with the zeal it requires. Having never served in such a position, Warren has not yet been tested, so my assessment of her political spine is partly speculation. But if I’m right, she's at least as threatening as Lisbeth Sander.

Harvey Column / President Barack Obama - 08/07/2010

Around the Web: Volcker Rules - Not!

Until the morning of January 21, 82-year-old former Federal Reserve president Paul Volcker had been a lonely and largely ignored figure among President Obama’s economic advisers.

Volcker seemed to be the only one of Obama’s advisers not under the spell of the “too big to fail banks” and their highly touted innovations.

Volcker was especially vocal about protecting the public from the financial world’s riskier innovations. As he told a financial conference last year, “Riskier financial activities should be limited to hedge funds to whom society could say: ‘If you fail, fail. I'm not going to help you. Your stock is gone, creditors are at risk, but no one else is affected.’ ”

It was Volcker who had said that the only financial innovation to benefit consumers in the last 20 years was the ATM card.

But he wasn’t getting much traction with the president and his advisers.

Then the Democrats lost Ted Kennedy’s Senate seat.

In a lurch back toward the populism he had embraced during his campaign, President Obama hastily reached out for Volcker.

During a press conference, the president endorsed something he called the Volcker rule as an essential plank of his financial reform plan. That rule would restrict banks from risky proprietary trades with their own (borrowed) money.

Here’s what the president said:

“Banks will no longer be allowed to own, invest, or sponsor hedge funds, private equity funds, or proprietary trading operations for their own profit, unrelated to serving their customers.  If financial firms want to trade for profit, that's something they're free to do.  Indeed, doing so –- responsibly –- is a good thing for the markets and the economy.  But these firms should not be allowed to run these hedge funds and private equities funds while running a bank backed by the American people.”

For more on proprietary trading and the Volcker rule, read this from Rortybomb’s Mike Konczal and the NYT. For more about why the Volcker rule was a good idea, see this from WSJ’s Dealbreaker.

Obama mentioned the Volcker Rule a couple more times, as did the man who was marshaling financial reform through the House, Rep. Barney Frank.

But neither the president nor anybody else in the Democratic leadership ever mounted a public campaign to make it an essential part of reform. In fact, within a month, the president was already backing off his support of the Volcker rule.

And now, like many other parts of the reform that would have protected consumers and inconvenienced banks, it has been largely gutted.

Bloomberg reports “lobbying by banks and congressmen sympathetic to Wall Street’s views, as well as some administration members in the banks’ defense, trampled the views of Volcker and others who favored a stronger proposal.”

The weaker provisions won’t even go into effect for as many as 12 years.

It would have been one thing for Obama and the Democrats to go down swinging on the Volcker Rule. But they didn’t even put up much of a fight.

If you’re as disappointed as I am with the president’s lack of leadership on this, after he made such a big deal about it, why not let him know?

Around the Web / Financial Reform Legislation / Martin Column / Paul Volcker / President Barack Obama - 06/30/2010

Consumer Protection, Fed Style

One of the big unsettled issues for the congressional conference committee considering financial reform is whether to create an independent financial consumer protection agency.

That’s what the House bill does. The argument for an independent agency is that consumers need a strong advocate in the financial marketplace.

The Senate decided that an independent consumer financial watchdog wasn’t needed, and that the consumer financial protector should live in, of all places, the Federal Reserve. After all, the Fed already has responsibilities to “implement major laws concerning consumer credit.” We all know how well that worked out.

The problem is that the Fed has functioned as a protector of the big banks, never more so than since the big bank bailout and in the battle over financial reform.

Despite promises for greater transparency, the Fed has repeatedly resisted attempts to get it to disclose all the favors it’s done for financial institutions since the bailout. If the Fed had put up half the fight against bank secrecy that it’s waged on behalf of bank secrets, consumers would never have been subjected to all those lousy subprime loans.

It is telling that no actual consumers or consumer organizations actually think that housing consumer protection inside the Fed is a good idea. Who does? The big banks and the Fed.

For those who still need convincing that a Fed-housed consumer protection agency is a bad idea, the Fed has provided a more recent example of what it means by consumer protection.

Last month it unveiled a database that’s supposed to help people choose the most appropriate credit card.

The database might be useful to professional researchers but provides little that would be of use to ordinary consumers. It presents the credit card statements by company but provides no other search functions, such as comparing credit cards by interest rates or fees.

Some of the presentation suggests that the information was dumped onto the Fed’s website without much thought. Bill Allison, who is editorial director of the Sunlight Foundation, a non-profit organization that digitizes government data and creates online tools to make it accessible to readers, said the following:

“I don't think there's anything wrong with posting it, but this is obviously not data you can search,” Allison told Bailout Sleuth.

He also pointed out that some of the agreements themselves aren't particularly informative. He cited the entry for Barclays Bank Delaware, which notes that the bank may assess fees for late payments and returned checks. “The current amounts of such Account Fees are stated in the Supplement,” the agreement reads.

But that supplement is not contained in the Fed's database. The Fed promises to go back and refine its database. But if they’re not devoting the resources to get this right now, with their ability to protect consumers under the microscope, do you really expect they’ll do better later?

An independent consumer protector is not simply some technicality to be bargained away. We’ve learned from the bubble and its aftermath that consumers need all the help they can get. Contact your congressperson and tell them you’re still paying attention to the reform fight. Check out your congressperson and see if they’re on the conference committee. If they are, your voice is especially important. While you’re at it, contact the president and remind him we won’t settle for any more watering down of financial reform.

Action / Federal Reserve / Financial Reform Legislation / Martin Column - 06/02/2010

Barack Obama, Meet Gray Davis

The Massachusetts Massacre rocked the D.C. establishment. But when it comes to political earthquakes, there’s no place like California. A look back at the Golden State’s electricity crisis, when a cautious governor let the state’s taxpayers bear the financial brunt of deregulation and was later ousted, suggests that last Tuesday’s vote was merely a foreshock of what lies ahead unless President Obama and congressional Democrats step up.

Nine years ago, Wall Street energy traders took advantage of California’s newly deregulated electricity market to do what Wall Street always does. By gaming the system, buying and selling electricity contracts multiple times, sending power out of state and ultimately shutting down their power plants to create blackouts, the speculators drove the price of electricity through the roof, until the state’s utilities collapsed and the California economy seized up. It was a massive windfall for Wall Street.

Although deregulation had been signed into law by Republican Governor Pete Wilson, it didn’t take full effect for several years. By the time deregulation proved to be the disaster myself and other consumer advocates predicted it would be, the Governor of California was Gray Davis, a moderate Democrat who was on the short list of contenders for the Presidency in 2004.

Then the lights went off – in middle of January, when consumption in California is at its lowest of the year. The energy industry said its plants were down for maintenance. The Bush Administration blamed California for not building enough power plants. But anyone not on the industry’s payroll or blinded by worship of the free market could figure out that California was being scammed, big time, by an artificial shortage.

With traffic signals dark and businesses shutting down, we called upon Governor Davis to send in the National Guard, seize control of the power plants, and turn the juice back on.

Davis didn’t know what to do. Deregulation wasn’t his idea, but it melted down on his watch. We later heard that representatives of the California Public Utilities Commission and some of the state’s utility companies had privately urged him to use the power of eminent domain to take over the plants. But Davis declined.

Instead, he brought in Wall Street advisors from firms like the Blackstone Group to guide him. At that point, the state’s utility companies had run out of money to pay for electricity. The energy companies refused to generate any more electricity unless the state of California – the taxpayers – stepped in. The Wall Street rating agencies piled on, threatening to downgrade the state’s credit rating if Sacramento didn’t agree. It was “blackout blackmail,” but Davis’s Wall Street advisors convinced him that it was the only solution, and he capitulated.

California borrowed tens of billions of dollars to pay the energy companies their vastly inflated prices for electricity. Our electricity bills will reflect that debt for another 20 years. Meanwhile, Wall Street firms reaped billions of dollars – from the phony crisis, and from the bonds that were floated to pay for it.

The lights came back on. But California voters never forgot how Gray Davis handled the confrontation between Wall Street and Main Street. And when an action figure from the movies gave them an opportunity, they terminated Davis’s political career.

Similar forces were at work in the Massachusetts election. Bay State voters were simply the first in 2010 to have the opportunity to express their dismay at how Washington has handled the financial crash that Wall Street engineered.

Like Davis, President Obama wasn’t even on the scene when Congress and federal regulators dismantled the Depression era safeguards that protected us against a speculation-driven collapse. But when confronted with an unprecedented crisis, President Obama, like Governor Davis, choked.

Instead of using every measure of his presidential authority to stop the speculation, punish the perpetrators, reform the financial system and relieve struggling Americans, Obama brought in a cadre of Wall Street players whose advice was, not surprisingly, to spend trillions of taxpayer dollars to bail out the banks, credit card companies and hedge funds, and let Wall Street go back to business as usual with barely a slap on the wrist. The hundreds of millions of Americans who didn’t qualify for a federal bailout were left empty-handed.

Like Davis, Obama will have a couple of years to turn this political and personal debacle around.

Putting a cap on the interest rates we pay to borrow our own money from banks and credit card firms would help millions of consumers weather the coming months and get the economy going again.  Replacing Geithner, Summers and others who used to work for the industry with a few Nobel Laureates like Joseph Stiglitz who warned of the coming collapse would be good for the White House, now trapped in its own pro-Wall Street bubble. Last week, Obama proposed breaking up the too-big-to-fail banks, which would prevent more reckless speculation and future crash/bailouts. But Americans now wonder if the President will follow his words with deeds, or surrender to the industry lobbyists without a fight, as he did before.

Whether Obama will find the courage that eluded Gray Davis remains to be seen.

Harvey Column / President Barack Obama / Too Big To Fail - 01/25/2010

Happy birthday bailout!

In a week, the nation will celebrate the one-year anniversary of Wall Street’s collapse.

For most, it won’t be a festive occasion. A whopping 16% of Americans able to work are unemployed or are working fewer hours than they want. Spending is way down because people are scared and many are unable to borrow – lines of credit have been slashed and credit card interest rates are skyrocketing. Since household spending amounts to at least 30% of the nation’s economic activity, this has had a devastating ripple effect on the economy.

Harvey Column / TARP - 09/16/2009