If you were looking for leadership of a real grass-roots movement for social change, Dick Armey might not be your first choice.
After he rose to become House Republican majority leader, he quit to cash in on his political connections with the top lobbying shop DLA Piper law firm. He’s also on the payroll of the Koch Brothers-funded Americans for Prosperity, one of the main sources of organizational backing of the Tea Party.
I’ve been critical of the Obama campaign’s hypocritical promises of a new kind of fundraising campaign that relies only on small donors, not fat cats, while he seeks donations from Wall Street.
But Obama’s nemeses in the Tea Party are no better, portraying themselves as a grassroots populist movement while relying on members of the Republican permanent government like Armey for leadership.
Armey actually had to quit his lobbying job because of his DLA Piper clients favored Obama’s health care reform, after the president cut a deal to secure support from drug companies. The Tea Party, meanwhile, has been dead set against the Obama plan.
It’s not that somebody like Armey, with his vast knowledge gained from slithering through the corridors of power all these years, might not have something to offer an authentic grassroots movement. But wouldn’t he have to offer a renunciation of his past connections before he participate? Wouldn’t he have to acknowledge that he had been part of the problem before he could be part of the solution?
Whatever minor disagreements Armey’s former clients might have with the Tea Party agenda, their interests dovetail neatly. Demonizing government and railing against strong regulations will only mean fewer watchdogs for the drug companies and bankers DLA Piper serves, and fewer tools to hold them accountable.
When President Obama appointed his new chief of the Securities and Exchange Commission, he promised she would “crack down on the culture of greed and scheming.”
But that culture seems to be getting the better of Mary Schapiro after the resignation of her agency’s top counsel, amid allegations of questionable ethics.
That former top counsel, David Becker, is among those whose family actually made money from the massive frauds of Bernard Madoff.
As SEC general counsel, Becker recently argued for a change in policy that would have allowed his family to keep more of the fortune they made from Madoff, rather than turning it over to pay those who lost money.
Becker might have been considered a curious choice for a new tougher SEC, considering that during an earlier stint as a top SEC lawyer earlier in the decade, Becker was among those who failed to crack down on Madoff, despite highly publicized warnings.
Now Becker has decamped back to the corporate firm from where he came, leaving Schaprio, his former boss, sputtering about what she can and can’t say about what she knew about Becker’s Madoff investments and when she knew it.
This is, of course, catnip to the Republicans looking for any opportunity to embarrass the Obama administration. Never mind that they oppose any kind of regulation of the financial industry at all.
What a great gift Schapiro and Becker have handed Republicans: proof that the Obama administration’s promises to protect us from the “culture of greed and scheming” were nothing more than a sham. Meanwhile, Becker slams the swinging door in our faces and goes back to his real job – representing the interests of big banks and financial interests.
In California, the nation’s largest real estate market, the robo-signing scandal has produced many calls to halt foreclosures, but little real change so far.
For several years, lawyers who represent borrowers in foreclosure have been complaining about massive and gnarly problems in the foreclosure process.
Because of the way Wall Street sliced and diced mortgages into derivatives and sold them off, the ownership of the mortgage had often not been properly documented, these lawyers said.
Such documentation is a basic legal requirement of foreclosures.
But they couldn’t get many judges to go along with them, especially in California, where, by state law, judges don’t typically oversee foreclosures. They only get involved if a borrower files suit to block a foreclosure, and even then, the courts are reluctant to do anything that would benefit borrowers who haven’t been paying their mortgages.
But disclosures over the past week in the robo-signing scandal may change that, after bank officials disclosed that they signed thousands of foreclosure documents without reading them first. Among the problems were documents that appeared to be forged or inaccurate assessments of how much borrowers owed on their mortgages.
In states with court-supervised foreclosures, the big banks voluntarily called a halt to foreclosures. But not in non-judicial foreclosure states like California.
The banks’ position so far is that the robo-signing doesn’t represent any substantial problems in the documentation, just that they were overwhelmed and understaffed and couldn’t keep up with the paperwork.
Walter Hackett disagrees. He’s a former bank executive who now represents borrowers in foreclosure at Inland Empire Legal Services. Hackett also runs an online bulletin board for lawyers fighting foreclosure. “Sloppy paperwork is too nice a way to describe it,” Hackett told me. “It’s a conspiracy of ignorance.”
He recalled dealing with Wells Fargo on behalf of one client. They were promising his client a loan modification; however, by the time Hackett untangled the paperwork, it turned out the mortgage was actually owned by another bank. “Before a bank can foreclose on a property, they have to prove that they own the note,” Hackett said.
Meanwhile, Attorney General Jerry Brown has issued cease and desist orders against some of the big banks that have acknowledged problems in their paperwork. But Brown’s concern is not actually the robo-signing, a spokesman said, but whether the banks are complying with a California state law that requires the banks to attempt to work out a loan modification before they foreclose on a borrower.
Brown spokesman Jim Finefrock said, “We’re talking to them [the banks]. We’re hoping for a resolution of the matter.”
He acknowledged that Brown was focused on compliance with the California law, not the larger issues of whether documents had been improperly filed in foreclosure cases.
The implications of the foreclosure fiasco are potentially huge, what Reuters business blogger Felix Salmon describes as “the mother of all legal messes.” If the problems with the paperwork prove substantial, they could undermine previous foreclosures and home sales, leading to a waves of litigation involving borrowers, homeowners banks and investors. The bad news for the economy is that the robo-signing scandal will only prolong the foreclosure crisis, keeping those facing foreclosure, and the entire housing market, from attaining some kind of stability.
While politicians and organizations have been calling for investigations and moratoriums on foreclosures, those are only a start. We need real leadership to forge long-term solutions, instead of the weak half-measures we’ve gotten so far. Maybe the robo-signing mess will offer the opportunity for the administration, the banks and the investors to try again to solve the foreclosure debacle and to get it right this time.
Driving through the west, headed towards home from a cross-country road trip with my wife Stacie and dog Billie, there's endless hours on the highway, no Internet and not much radio except for hard-right talk.
Hearing the voices passing through the desert states is a grim reminder of the forces we're up against, who now characterize themselves as the real "community organizers," who represent the real people.
It’s not just the right wing. Lots of people have adopted the timid trickle-down theories embodied by our political leadership: "Don't get too tough on BP or they’ll take away our jobs. Don't cross Wall Street, we need to keep the market stable."
We’re in Winslow, Arizona, wondering whether a boycott will worsen the dire poverty we see in front of us. It’s easier and more politically expedient to make immigrants the scapegoats for lack of jobs and economic uncertainty than it is to question a system that is seriously out of whack, that offers the biggest rewards to those who gamble on our collective losses without risking their own wealth.
That's what a big chunk of the financial system like hedge funds and derivatives has become. Cynical and bloodthirsty, producing nothing except profits for the few. And the gesture toward financial reform winding its way through congressional conference committee does little to change that.
I understand the fears of friends and family that the money they have saved and invested over the years will be lost if we challenge Wall Street and the robber barons of our time. The financial industry has shown that if it doesn’t get what it wants it is capable of wrecking our economy and causing great suffering for others. But this kind of blackmail undermines democracy. We deserve a financial system that provides both transparency and financial security.
Traveling through the country, along roads adjacent to rail lines and mile-long freight trains, I kept thinking about our nation's history and those rare moments of courageous leadership like Teddy Roosevelt tackling the railroad trusts, and FDR and his team creating the New Deal to save the financial system from its own excesses. And the creation of the GI Bill, which was designed to bolster possibilities for people who risked their lives for our country, and had played a huge part in the creation of a vital middle class. These were moments when audacious politics met pragmatic problem-solving.
I attended the Personal Democracy Forum in New York City earlier this month. The topic of the wide-ranging conference was “Can the Internet Save Politics?”
One of the most inspiring speakers was Daniel Ellsberg. Amid all the excitement over the possibilities for political activism and engagement with new social media, Ellsberg reminded us that one of the most important ingredients is the same as it always was: moral courage.
Ellsberg was the Pentagon military analyst who leaked a secret Defense Department account of the disgraceful political decisions that led the country into the Vietnam War and its outcome. Plenty of people on the inside knew what was happening in Vietnam, Ellsberg said, but they had kids to put through college and mortgages to pay. They were not about to step outside the system and jeopardize their careers.
Not everybody has the nerve or inside information to be a whistleblower like Ellsberg. But we can demand a financial and economic system where we don’t have to sacrifice our financial security to those who gamble against our futures.
We can demand that our president delivers on his campaign promise of real change. There can be no real change without confronting corporate power over our government and political system. We are as controlled today by the financial and oil industries as we were by the railroad barons when Teddy Roosevelt took them on. TR said one should speak softly and carry a big stick. President Obama has been doing the opposite. We need to demand that Barack Obama follow TR’s suggestion.
The administration that promised change we can believe in and the highest level of transparency in history now delivers “too big to fail” banks - bigger, more complicated and secret than ever.
First, the Obama administration and the Democratic majority in Congress continued policies that assured a number of large financial institutions that taxpayers had bailed out after the financial collapse got even larger and more powerful.
Now the administration and congressional leadership have proposed a scheme that leaves the big banks in place, with a regulatory scheme that provides more questions than answers, with secrecy that treats the banking system like a CIA covert operation.
What a striking contrast between the urgency and dramatic action the government mobilized to meet Wall Street’s financial crisis last year and the continuing hand-wringing, half-measures and wishful thinking that have greeted the dire continuing financial crisis on Main Street.