Main Street talks back

Inside the D.C. bubble, Wall Street’s titans continue to have their way.

Their Republican allies in the Senate helped the titans kill the Buffet Rule, which would have required those who made more than $1 million a year to pay at least 30 percent in taxes, double what investors pay on capital gains income.

Wall Street has continued to stifle efforts to regulate risky derivatives like the ones that led to the financial collapse, while most of the Dodd-Frank financial reform enacted in the wake of the financial crisis has yet to be implemented.

In the Wall Street Journal (no link), columnist David Weidner asserted Wednesday that Wall Street has gotten some of its swagger back. “Big financial interests,” Weidner wrote, “are beating back every broadside with a vigor not seen since the financial-bubble days.”

But outside Washington it is a different story.

Voting for the first time on the CEO compensation of a too-big –to-fail bank, Citibank shareholders rejected a $14.9 million annual compensation for its top executive.  The “say on pay” vote, mandated as part of Dodd-Frank, is strictly advisory. Citibank officials can ignore it if they want.

For years, the company’s executives had promised that their pay would be strictly tied to performance. The CEO, Vikram Pandit, had been making $1 a year since the bailout during which time the bank performed miserably. But this year, the bank’s directors decided that Pandit deserved to get back on the gravy train with the rest of the industry’s CEOs.

The following day, shareholders at another smaller regional bank, FirstMeritCorp of Akron, Ohio, rejected the compensation package for their CEO in another “say on pay” vote. Directors of that bank wanted to raise the CEO’s pay $1 million to $6.4 million a year, after the bank’s stock had fallen 20 percent during the past year.

They’re just a couple of non-binding votes. But I found it striking that when Main Street voters had the opportunity to express their opinion directly on one aspect of Wall Street’s practices, the voters voiced disapproval.

Wall Street can’t dismiss their shareholders as a bunch of Occupy Wall Street types out to destroy the system, or marginalize their rejection as mere envy. These are hardnosed investors who would like nothing better than for Wall Street banks to get on solid footing and make money. But these voters realize that despite all the administration’s happy talk about how well the bailouts have worked, the banks still aren’t sound, and that the outrageous pay for top executives who haven’t delivered is a big part of the problem because it encourages focus on short-term profit, loading up on risk and relying on continuing government help to prop up their businesses.

According to Weidner, polls show that most voters have moved on from anger at Wall Street. That may be so. But if ordinary citizens, rather than Washington insiders beholden to Wall Street, were making decisions, I think they would coolly, calmly and rationally favor the wealthy paying their fair share of taxes, and sensible regulation that would keep the titans from getting too carried away with themselves and their schemes.

 

Congress / Derivatives / Executive Pay / Financial Reform Legislation / Martin Column - 04/20/2012

D.C. Disconnect: It's Just a JOBS Recession

According to one of the pontificators on NPR’s Marketplace, the economy is actually fine, we’re just in a “jobs recession.”

Now I feel better.

This is what passes for insightful commentary among the media elite on the day that unemployment shot back up to 9.2 percent.

“If you’re rich, it’s great,” says Felix Salmon, Reuters columnist. “But if you’re a working person it’s terrible.”
As for President Obama, he reacted to the terrible jobs report by saying: “We still have a long way to go.”

Except he shows no inclination to go there.

He’s wrapped up in the Republican austerity agenda so tight he can’t find his way to suggest anything to reduce unemployment.

He meekly suggested that reducing the deficit would help create jobs, though most economists acknowledge such cuts will hurt the economy – and the unemployed.

We all know that President Obama needs to raise $1 billion for his presidential campaign, and Republicans are falling over themselves to kill financial reform in their efforts to woo Wall Street. You have to admire the Republicans' focus: they don't give a damn about the economy, they only care about getting rid of Obama.

But both Obama and the Republicans they must be counting on only the rich voting.

The day before the jobs report, Obama’s top political adviser told Bloomberg News that the unemployment rate wouldn’t hurt Obama’s reelection chances. Obama adviser David Plouffe also asserted that people thought that the economy was getting better, based on anecdotal evidence.

Here’s what Plouffe had to say:

“You see, people’s — people’s attitude towards their own personal financial situation has actually improved over time. You know, they’re still concerned about the long-term economic future of the country, but it’s things like “My sister was unemployed for six months and was living in my basement and now she has a job.

There’s a — a “help wanted” sign. You know, the local diner was a little busier this week. Home Depot was a little busier. These are the ways people talk about the economy.”

Either Plouffe is drinking his own Kool-Aid or thinks he can play off the worst economic downturn since the Great Depression as a minor dip.

As emptywheel points out on Firedoglake, the measures of consumer confidence don’t agree with Plouffe’s blithe assessment. As emptywheel suggests, if they expect voters to keep them in their jobs, Plouffe, Obama and the rest of the administration need to get out of their bubble and start listening “to the pain of real people.”

Martin Berg

 

Around the Web / Martin Column / Uncategorized - 07/08/2011

Around the Web: Typos and Tired Arguments

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

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

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

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

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

Federal deposit insurance.

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

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

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

Around the Web - 05/07/2010

Around the Web: Rookie Senator Fumbles Financial Reform

The news media / blogosphere have been having too much fun at the expense of the former Cosmo model who could be the key 41st vote if Republicans decide to kill financial reform.

It’s no shock Sen. Scott Brown would oppose it, given the enthusiastic support he got from Wall Street in his recent election, taking the Massachusetts seat long held by Ted Kennedy.

But Brown apparently got a little flustered when a reporter asked him to explain what exactly he was opposed to. It was one of those trick questions: What areas in the bill would Brown like to see fixed?

Brown responded by asking what the reporter thought. “Well, what areas do you think should be fixed?” Brown said. “I mean, you know, tell me. And then I’ll get a team and go fix it.’’

Eat the Press’s Jason Linkins snorted on Huffington Post: “Yes. Some reporter may want to point out the epic collapse of the derivatives market to Scott Brown, and he will assemble a team of... I don't know...sled dogs? To fix it? Is that good? Will that work?”

Brown told the Globe he opposed a consumer financial protection agency because it would add another layer of regulation.

“Which is, of course, true,” pointed out Washington Monthly’s Political Animal Steven Benen. “ That's the point of the legislation. The financial industry went unchecked and nearly destroyed the global economy. That's why the legislation is being considered – to bring oversight and accountability through regulation.”

Brown also faces some hard second-guessing on a novel argument he made against financial reform on Face the Nation last week: it’s a jobs killer. He asserted that it would cost his state 35,000 jobs – about 17 percent of the state’s financial sector workforce.

When the Globe followed up to nail down Brown’s source for that statement, his staff told the newspaper he got the figures from MassMutual, an insurance company based in the state that has opposed financial reform.

But company officials said Brown had misunderstood them; they were talking about job losses the state had already suffered. Even those figures were grossly inflated, the Globe found. According to the state’s Executive Office of Labor and Workforce Development, the state has lost about 19,000 jobs in the financial sector, which includes the insurance industry, and also at banks, securities firms, investment management companies, and real estate businesses.

A MassMutual official insisted the company agreed with Brown anyway; similar losses could result from financial reform, he insisted. Sen. Brown stood by his earlier statements.

Whatever. A Globe columnist found Brown’s projections, as well as MassMutual’s, preposterous. “The idea that anything in the Senate bill could create additional job losses on a similar scale as the damage caused by the earthquake in the real estate and brokerage industries is simply nuts,” Globe columnist Steven Syre wrote.

Perhaps sensing an opportunity in Brown’s confusion, President Obama put in phone call to Brown from Air Force One.

The president probably didn’t bring up the question posed by Washington Monthly’s Benen: “Do you ever get the feeling that maybe Scott Brown isn't quite ready for prime-time, and that his service in the Senate is more humiliating than it should be?”

Around the Web / Martin Column - 04/21/2010