Three Major Issues The Presidential Candidates Are Ignoring

 

 What if they held an election but didn’t discuss the most important economic issues?

That’s what’s happening here in 2012.

Yes, taxes and the deficit are significant. But there are even more crucial issues that will determine whether the country continues to slide into wider income inequality and destroys what’s left of the middle class.

And these three crucial issues have been barely mentioned during a campaign obsessed with who pays what in taxes and who doesn’t.

Dean Baker, of the Center on Economic Policy Research, neatly summed up several of the left-out issues recently.

On one of the most critical economic issues, the so-called free trade pacts such as NAFTA and the more recent Korean trade agreement, both parties agree: they favor them.

The media cooperates in keeping this issue off the table by repeating the misleading claims of proponents of the agreements while omitting or marginalizing critics.

“Free trade” is really the big lie of our economy and our politics. As the critics point out, these agreements should be accurately labeled “corporate rights agreements” since they are much more concerned with that issue than with trade. Not only do they result in lower wages in the U.S. and devastated small farming in other countries, these agreements allow corporations to challenge environmental and labor protections in special courts in which the public has no voice.

Both parties crank up the rhetoric to promote the notion that the  “free trade” is the road to economic prosperity for everybody. But as Baker points out, the reality of “free trade” is far grimmer for those that work for wages to earn a living because it puts “downward pressure on the wages of manufacturing workers by putting them in direct competition with low-wage workers in the developing world.”

The absence of any discussion of these agreements in the political debate exposes a major fraud on the part of both parties. While the Democrats tout themselves as the party of the little guy, their support for “free trade” shows how closely they hew to the corporate agenda on issues that matter most. For the Republicans, their support for “free trade” agreements which, in the real world, prop up some corporations while punishing others shows they’re less interested in picking economic winners and losers than their free market rhetoric lets on.

And there’s a huge trade deal being secretly negotiated right now, the Trans-Pacific Partnership (TPP), which I previously wrote about here, calling it a Free Trade Frankenstein. Others have called it “NAFTA on steroids.” As with other trade negotiations, the public has been kept out while the corporate lobbyists have full access.

The only TPP issue on which the president and his challenger disagree is who could whip out his pen faster and sign the TPP once the secret negotiations are concluded.

The second major economic issue left out of this election is the deeply unpopular 2008 bailout of the financial sector and corporate America, including the $700 billion Troubled Asset Relief Program and the $16 trillion in cheap or free loans the Federal Reserve provided to corporate America in the wake of the financial collapse.

All this financial assistance was provided with little public debate and without any conditions imposed on the recipients.

The Obama administration dismisses all questions about the bailout by insisting that all the TARP money has been paid back. Case closed, the administration contends.

But could a different kind of bailout, one which imposed specific conditions on banks and corporations, helped more struggling Americans than the one we got, which propped up bank and corporate executives? Why did those portions of TARP that were targeted at ordinary Americans facing foreclosure fail so badly?

And how does this bailout, which picked winners and losers, jibe with the Republicans’ free market rhetoric? What about a belated bailout for the rest of us? Plenty of fodder for tough questions for the president and his challenger, if anybody cared to ask.

The third issue is one that the two parties have disagreed on: increasing the minimum wage.

As a candidate in 2008, President Obama promised to raise the federal minimum wage from $7.25 an hour to $9.50 by 2011 but has taken no action to do so. For his part, Republican challenger Mitt Romney has said he favors tying the minimum wage to inflation, until the right wing of his party objected.

According to a recent paper by the Economic Policy Institute, phasing in the $9.80 minimum wage would raise the wages for 28 million workers, who would earn an additional $40 billion during the phase-in, while gross domestic product would increase by $25 billion and 100,000 new jobs would be created.

We need a robust debate on these issues in the remaining weeks of the presidential campaign that challenges the president and Mr. Romney on where they stand and what actions they’ll take, not just a stale rehash of the same old arguments on taxes. But we won’t get that debate unless we demand it.

 

Federal Reserve / Income inequality / Martin Column / Mitt Romney / TARP / TPP - 09/25/2012

Strong message for weak leaders

A New York jury didn’t just acquit a midlevel Citibank executive, they sent a strong, clear message to Washington.

The only question is, how do we get Washington to start listening?

The message came along with a not guilty verdict in the case of a Citibank executive, accused by the SEC of negligence for failing to provide disclosures to clients that his own bank was betting against the complex financial packages that the bank was selling.

Brian Stoker’s lawyer argued that he was just one of many who were doing the same thing in Citibank’s employ.

The attorney argued that it was others, higher up the chain of command at Citibank,  who had committed the misconduct.

Evoking the child’s book, “Where’s Waldo?” the lawyer, John Keker, invited jurors find those hidden characters who were really to blame.

Not only did the jurors acquit Stoker, they wrote an unusual letter to the SEC: “This verdict should not deter the SEC from continuing to investigate the financial industry, review current regulations and modify existing regulations as necessary,” the jurors wrote.

Twenty-three year old juror Travis Dawson told the New York Times: “I’m not saying that Stoker was 100 percent innocent, but given the crazy environment back then it was hard to pin the blame on one person. Stoker structured a deal that his bosses told him to structure, so why didn’t they go after the higher-ups rather than a fall guy?”

And the jury foreman, Beau Brendler, told American Lawyer magazine: ”I would like to see the CEOs of some of these banks in jail or given enormous fines,” he said, “not a lower level employee.”

In a separate case, Citibank has already agreed to pay a fine on the collateralized debt obligations at the heart of the case against Stoker.

While the Justice Department is touting that civil fines for fraud have skyrocketed, the Times reported that prosecutions against individuals, especially those at the top, are rare to nonexistent.

“A lot of people on the street, they’re wondering how a company can commit serious violations of securities laws and yet no individuals seem to be involved and no individual responsibility was assessed,” Sen. Jack Reed, Democrat of Rhode Island and chairman of a subcommittee that oversees securities regulation, said at a recent hearing.

The SEC has been hobbled by 20 years of inadequate funding and a revolving door that delivers SEC lawyers right into jobs with the firms that they’re supposed to be regulating, or with the law firms that represent those firms.

And that’s not the worst of it.

Prosecutors take their cues from the top. The Obama administration, from the president to his treasury secretary, Tim Geithner and his attorney general, Eric Holder, has consistently blamed the 2008 financial collapse on stupidity and greed but said that most of the worst banker conduct was not illegal. President Obama has paid only lip service to holding bankers accountable while doing nothing.

The most recent example is a mortgage fraud task force the president announced in January. It took months to get staff and office and the task force has done little more than issue a couple of subpoenas and some press releases.

So it’s no wonder that the SEC continues to avoid pursuing the financial elite.

Meanwhile, both presidential candidates and the big media continue to ignore the issue of banker accountability.

As Mike Lux has pointed out, in the 2010 exit polls, 37 percent of voters blamed Wall Street for the on-going weak condition of the U.S. economy. Those voters, who are angry at Wall Street and skeptical of government, had voted 2 to 1 for Obama in 2008, but in the midterms, broke 56 to 42 percent Republican. They now view the president as a “Wall Street liberal.” These voters have no illusions about Romney, but  given the choice, they will favor the candidate who promises to lower their taxes and reduce the deficit, according to Lux.

Can our political leaders hear the message that the New York jury is sending? Or has the money that rules our political system completely drowned it out?

Contact your representative and let them know we haven’t forgotten all the promises to hold Wall Street accountable for its misdeeds.

 

 

 

 

 

 

 

 

 

Citibank / Martin Column / Securities and Exchange Commission (SEC) - 08/10/2012

Doing the minimum for the 99 percent

From both left and right, commentators have been heating up the Internet with proposals to raise the minimum wage from $7.25 an hour.

It’s not just Ralph Nader beating the drum for the Occupy movement to spearhead a movement to raise the wage, which hasn’t been increased since 2009.

Ron Unz, commentator at the American Conservative, has proposed an increase as part of a new Republican immigration strategy, and he’s has been pleading for Mitt Romney to adopt an increase in the minimum wage as part of his campaign.

Romney has yet to heed Unz’s plea, which force the candidate to fight some ingrained Republican dogma that preaches against the minimum wage, let alone increasing it. According to this old dogma, the minimum wage discourages small business from hiring.

It was President Obama’s chairman of his council advisers, Alan Kreuger, wrote a study, back when he was a Princeton economics professor, who debunked that notion.

In the past, Romney has shown some willingness to discard the customary Republican disdain for the minimum wage, speaking in favor of increases pegged to increases in the consumer price index.

Then last month, after the Wall Street Journal and others beat up on Romney’s minimum wage position, the leading Republican contender backed down. “There’s probably not a need to raise the minimum wage,” Romney told CNBC.

On this issue, the Wall Street Journal and the Republican base is way out of step with voters across the country, who consistently support an increase. According to one recent poll, 67 percent of voters favor an increase.

Which brings us to the other candidate: the president. He’s always said he favors an increase.

Back in 2007, when he was just a contender in Bettendorf, Iowa, Barack Obama gave a speech on “Reclaiming the American Dream,” in which he promised:  “I won’t wait 10 years to raise the minimum wage, I’ll raise it every single year. That’s the change we need.”

After Obama was elected, during his transition to the presidency, Obama’s team promised to raise the minimum wage to $9.50 an hour by 2011, with future raises pegged to inflation “to make sure that full-time workers can earn a living wage.”

But the only increase during Obama’s administration was the one in 2009 from $6.55 to $7.25, which was mandated by a law passed during a previous administration.

The president had nothing to do with it.

Last year, when his labor secretary, Hilda Solis, was asked about the need for a minimum wage hike, Huffington Post reported that she “largely ducked the questions.”

Maybe keeping his campaign promise and improving the economy are not good enough reasons to recharge the president’s enthusiasm for launching a campaign to boost wages for the lowest paid workers.

Fortunately, there are plenty of other reasons that should convince him to do what he said he would.

For one, it’s simply the right thing to do.

As the president himself pointed out just four months ago in a speech with a broad populist message in Osawatomie, Kansas, income inequality is the “defining issue of our time.”

In 1968, the federal minimum wage was $1.60 an hour. Gasoline was 34 cents a gallon and an average new car cost $2,800 dollars.

So the worker on minimum wage could buy nearly 5 gallons of gas for an hour’s wage.  Now that minimum wage worker can buy less than 2 gallons of gas for an hour’s wage.

If you adjust that 1968 wage for inflation, it would be $10 an hour – far more than today’s $7.25 minimum wage.

As the New York Times pointed out Sunday, the average corporate CEO made $14.4 million last year, compared to the average annual U.S. salary of $45,230. A fulltime worker paid the minimum wage makes far less – $15,080 a year.

Correcting for inflation, those with the least income have seen their incomes reduced over the past decade.

Another good reason for Obama to get with it– his base, which has been frustrated with his compromises with Republicans and cave-ins to bailed-out bankers, strongly supports an increase. And so do independent voters. Obama needs both of those groups to win re-election. So doing the right thing is also smart politics.

Income inequality / Martin Column / Mitt Romney / President Barack Obama - 04/11/2012

Tweet Charlie: Pop the Corporate Personhood Question

Now that Mitt Romney has taken a stand on corporate personhood, shouldn’t the rest of the Republican field?

Luckily, they have the perfect opportunity to all go on the record this Tuesday at their debate in New Hampshire.

They may need a little help. That’s why we’re tweeting the debate moderator, Charlie Rose, to remind him about this key issue and suggest he should pin the candidates down on their stance.

In case you missed it, Romney made his position clear at the Iowa State Fair in August, when he said, in response to an angry heckler, “Corporations are people, my friend.”

The only other Republican candidate who I found has taken a stand is Ron Paul, who came out strongly against the notion that corporations are people.

Rose also might want to follow up with Romney: if corporations are people for purposes of political contributions, why aren’t they people for the purposes of paying taxes, where they have an entirely separate set of laws that enable corporations to take advantage of all kinds of arcane loopholes, so that many of the largest companies, like General Electric, pay absolutely no taxes?

If Charlie wants to get beyond the rhetoric to the heart of the uneasy feeling most people are having about our political system, he should follow up with these questions:

Is it good for our country for corporate lobbyists to have unlimited access to our politicians to engineer trillions in no strings attached bailouts and other special treatment for their clients, while Americans without that access get screwed?

Is it OK for corporations to buy our politicians with lavish anonymous contributions, making a mockery of our democracy? 

Nothing shows the disconnect between Washington and the rest of the country better than the U.S. Supreme Court’s terrible Citizen United decision last year, which defined corporations as people under the First Amendment for purposes of influencing elections and unleashed a tsunami of anonymous corporate donations to politicians and their PACs.

Isn’t the best way to fix the corporate dominance over our politics to pass a constitutional amendment, like the one we have proposed here, to undo Citizens United?

I’m sure I’m not the only American who’d like to hear the Republican candidates’ answers to these questions. I’m sure plenty of other Americans would like to hear the answers as well.

Tweet Charlie @charlieroseshow. Ask him in your own words or feel free to send him this post.

Go ahead, Charlie, pop the questions.

Citizens United / Martin Column - 10/07/2011

High Court's Low Opinion of Foreclosure Practices

Apparently the Massachusetts Supreme Court neglected to read the bipartisan memo reminding politicians and judges to refrain from doing anything that might upset the banks.

Most judges have shown extraordinary deference to bankers, even amid growing evidence that those bankers haven’t been following the law in pursuing foreclosures.

That may be beginning to change, in the wake of a Massachusetts ruling against banks in a closely watched foreclosure case.

Right now the decision only has force in Massachusetts. But as other cases challenging foreclosures make their way through the courts across the country, other judges are likely to be guided by it. In addition, the ruling will also provide guidance for lawyers posing legal challenges to other mortgages scrambled in the securitization process.

The Obama administration has consistently downplayed evidence of rampant fraud and sloppiness in the way banks split up, packaged and sold off mortgages to investors in the heat of the housing bubble.

Almost all subprime mortgages as well as millions of conventional mortgages originated before the meltdown were securitized and sold to investors. Securitized mortgages account for more than half of the $14.2 trillion in the total outstanding U.S. mortgage debt.

Bankers have tried to dismiss these problems with what’s known as the securitization process as a matter of mixed-up paperwork that can be straightened out.

But the highest level court to examine the issue thus far took the issue much more seriously. Last week the Massachusetts Supreme Court invalidated what had become a common practice – banks seeking to foreclose on properties without properly holding ownership of the promissory note and mortgage as part of the securitization. The court  focused heavily on the use of the power of sale contained in mortgages; the same power exists in the vast majority of California deeds of trust.

Ruling in a closely watched case, the high court rejected arguments by U.S. Bancorp and Wells Fargo & Co. that they didn’t have to prove their authority to foreclose. The banks had argued that evidence that they intended to transfer ownership was enough to establish their standing to foreclose.

The ruling makes dense but fascinating reading, with some passages coming through loud and clear even if you’re not steeped in real estate law.

The justices stressed they weren’t creating any new interpretation of law. “The legal principles and requirements we set forth are well established in our case law and our statutes,” wrote Justice Ralph D. Gants. “All that has changed is the (banks) apparent failure to abide by those principles and requirements in the rush to sell mortgage-backed securities.”

Banks have argued that their “pooling and servicing agreements” allowed them to transfer mortgages to securitized trusts “in blank” without specifying whom the new owner would be.

But the justices ruled in U.S. Bank v. Ibanez that the “foreclosing party must hold the mortgage at the time of the notice and sale in order accurately to identify itself as the present holder and in order to have the authority to foreclose under the power of sale...”

In a concurring opinion, Justice Robert Cordy wrote: “There is no dispute that the mortgagors (borrowers) had defaulted on their obligations.”

But that’s not the legal standard. “Before commencing such an action...the holder of an assigned mortgage needs to take care to ensure that his legal paperwork is in order,” Cordy stated.

The ruling could lead to an increase in complicated and expensive litigation, if those whose homes have already been foreclosed on sue to challenge the financial institutions’ authority to conduct the foreclosures. Investors may also sue, contending that the banks didn’t properly document the ownership trail on the mortgages contained in a particular investment pool.

Can banks go back in and straighten out their securitization mess? So far the banks are downplaying the significance of the ruling. But untangling the paperwork may not be so easy. Many of the entities that created the securitized pools have gone bankrupt or dissolved into other businesses. At the very least, it could pose a costly and complicated process for the bankers, one that would entail taking a hard look at the details of the deals that led to the country’s financial collapse.

Foreclosures / Martin Column - 01/11/2011

Around the Web: They Told Us So

The foreclosure robo-signing scandal may not have been making headlines until a month ago, but nobody should be surprised that it has finally erupted.

There have been warnings after warnings, all of them ignored by politicians, policy makers and the mainstream media.

Among those who have been ringing the alarm bells is Florida lawyer April Charney, with Jacksonville Area Legal Aid, who has traveled the country to train lawyers how to challenge foreclosures. In California, Walter Hackett, of Inland Empire Legal Services, has overseen a listserv for consumer attorneys representing borrowers facing foreclosure. Web sites like 4closurefraud.org have also been relentlessly focused on the issue.

Earlier this year, Mother Jones ran a stinging story, “Can Anyone Stop The Predatory Lenders?” detailing the misdeeds of mortgage servicers. Reporter Andy Kroll pointed out that the feds were basically paying the same shoddy characters who engineered the subprime crisis to fix the mess.

And Bloomberg’s Jonathan Weil cautions against taking comfort from the big bankers who are now trying to minimize the impact of the fiasco they created. “Three years ago, as the subprime mortgage crisis began to spiral, one of the lessons the public should have learned is that the leaders of these companies often have no idea what’s going on inside them,” Weil writes. “We may be witnessing the same phenomenon again. There’s no excuse this time for anyone to be surprised.”

Around the Web / Foreclosures / Martin Column - 10/21/2010

BIPARTISANSHIP FOR BIG BANKS

With 2 weeks to go to the midterm elections, President Obama and the Republicans have found an issue they can agree on: if they just do nothing, the foreclosure scandal will go away.

They’re betting that the use of robo-signers to process foreclosure documents without actually reading them will just amount to a pile of sloppy paperwork.

They’re betting that blaming borrowers will trump public outrage over banks holding themselves above the rule of law that states they have to prove that they own a mortgage note before they can foreclose.

You can understand the Republicans’ position; they argue that the government has no responsibility and is only capable of making any problem worse.

President Obama’s approach can’t be much of a surprise either, after leaving his financial policy in the hands of Wall Street apologists, fighting the most robust financial reform, providing a failed foreclosure relief program and not raising a finger to help when banks opposed his own proposal and not using his bully pulpit to push it. The president, despite his occasional bursts of rhetoric, has never assumed the role of tough regulator and reformer he promised on the campaign trail, preferring to act as the big bank’s collaborator-in-chief.

The president’s name may not be on the ballot November 2. But many of the Democrats who are facing the voters advocate a more robust response: a foreclosure moratorium while the very real legal issues are sorted out.

The Obama administration has taken to sending signals to the voters, hoping that might allay their worries. The feds announced the formation of that entity designed to show concern while guaranteeing that no action will be taken for the foreseeable future: a task force.

A number of banks had started their own voluntary moratoriums on some foreclosures. But two of those banks, Ally and Bank of America, have already canceled them. Meanwhile all 50 state attorney generals have announced their own investigations into the mess.

Despite the efforts of bank apologists to minimize it, the foreclosure debacle continues to shape up as a series of nasty legal battles, with a dramatic, unsettling impact on the housing market.

Opponents of a foreclosure moratorium portray it as a way of giving homes to people who haven’t been making their mortgage payments. But that’s a phony argument. A moratorium will not end up causing anybody who hasn’t been paying their mortgage to own a house they didn’t pay for.

As far as borrowers living in their houses for free, let’s be clear: that’s happening now, and it’s not the fault of any moratorium. It’s happening as a result of the banks’ own chaotic approach to foreclosure, often not wanting to take possession of property that has lost its value or not hiring enough staff to manage the properties properly.

This is the terrible irony about the banks’ fear-mongering. While they’re always predicting awful consequences to any action that limits their own power, the banks create the consequences all by themselves, or with the help of their willing collaborators.

Bank of America (BoA) / Foreclosures / Martin Column / President Barack Obama - 10/20/2010

Letting Go Of Principals

After more than a year of ineffective attempts to stem the foreclosure crisis, the Obama administration this week may be edging toward acknowledging reality.

This sick housing market isn’t going to heal itself, and won’t get better with the band-aids they’ve applied so far. The stakes are high not just for the homeowners: without some stability in housing, the rest of the economy can’t heal either.

The administration announced today that it would begin to encourage banks to write down the principal when modifying borrower’s underwater mortgages. Bank of America also said this week it would tiptoe into principal reduction.

Time, and follow-through will tell whether the administration intends the principal write-downs as another band-aid or something more substantial. Time will also tell whether the administration will fight for write-downs or wilt in the face of the inevitable backlash. It’s also important to note that all of the administration’s foreclosure initiatives rely on the voluntary cooperation of lenders, with modest incentives paid by the government.

There is every reason for healthy skepticism of the administration and the banks’ ability to tackle the problem. As John Taylor, president of the National Reinvestment Coalition testified before a congressional panel this week: “We rush to give banks tax breaks, but we dawdle to help homeowners who through no fault of their own lost their jobs because of the economic crisis or bought defective loans that caused the economic crisis.”

Foreclosures / Martin Column - 03/26/2010

Never-Ending Bailout is Not a Partisan Issue

It would be hard to find two congressmen more politically opposite than Brad Sherman and Jeb Hensarling.

Sherman is solid Democrat from the San Fernando Valley in southern California. Hensarling is a red-meat Texas conservative protege of former senator Phil Gramm.

Sherman and Hensarling may not agree about anything else.

But the two men have been outspoken in one shared view: that the bailout known as the Troubled Asset Relief Program, or TARP has lacked accountability or transparency from day one.

Martin Column / TARP - 10/14/2009

Administration still won't rein in lavish pay schemes

Imagine if you could report the value of your work on your tax return, rather than your actual income. At the end of the year, you’d issue yourself a W2 or a 1099 based on a comparison of how other people who did the same kind of work valued their efforts. The lower the worth you put on your work, the lower your taxes. Let’s just say the IRS wouldn’t be too happy with a system that encouraged low-balling.

Wall Street bankers were able to arrange an equally self-serving compensation system for themselves - and they got away with it.

Executive Pay / Harvey Column - 09/20/2009