Tuesday, March 09, 2010
Taking on the Banks: Critical Administration/Democratic Failure: Jobs, Wall Street and Banks: The Administration Achilles
(1) Oversight of Big Banks Remains with Fed Weakened reform, as consumer protection won’t be an independent agency
Banks with more than $100bn of assets will be overseen by the US Federal Reserve under a regulatory reform plan that represents a partial victory for the central bank after months of attacks in Congress.
Chris Dodd, the Senate banking committee chairman, had proposed hiving off all bank supervision to a single regulator but is set to propose this week that the 23 largest institutions stay under the Fed’s oversight, according to people familiar with the plans.
At issue over the weekend was the regulation of several hundred state chartered institutions that also want to remain under the Fed’s supervision.
While attention has been focused on an argument between Democrats and Republicans over the powers and location of new consumer protection functions, which may also be housed within the Fed, other elements of regulatory reform – deemed more important by many institutions and policymakers – are close to fruition.
A new “resolution” regime to deal with failing, but systemically important, institutions would allow the government to wind up a company quickly to avoid contagion spreading through the financial system.
But in a concession to Republican fears about giving government too much power over business, a bankruptcy judge would provide checks and balances. http://www.ft.com/cms/s/0/0f1b6822-2a2c-11df-b940-00144feabdc0.html?nclick_check=1
(2) Katrina Vanden Heuvel
…there is no better measure of how craven and corrupt our politics have become than the news that the proposal for the Consumer Financial Protection Agency is about to be abandoned in the Senate. Republicans opposed it from the start, while shamelessly peddling themselves to Wall Street's deep pockets. In the House, not one Republican voted in favor of the diluted reform bill that includes an independent CFPA. And in the Senate, Republicans announced that the price of bipartisan agreement was to shelve any notion of an independent agency. Instead, they're pushing for a new presidentially appointed watchdog to be put inside the Federal Reserve -- with rule-making subject to objections by the very same regulators who failed so consistently and ignominiously to protect consumers in the past. Senate Banking Committee Chairman Chris Dodd is trying to get Democrats to sign on to an only slightly toothier version of this compromise. Barney Frank, Dodd's counterpart in the House, had the better reaction: "I thought it was a joke at first, to be honest."
In this debate, the president has been largely absent without leave. Mired in the interminable health-care debate, he has been unable or unwilling to provide Americans with a clear explanation of what needs to be done to dig our way out of the hole we're in. Without a White House willing to fight hard for reform, Republicans and corporate Democrats pay little price for catering to the bank lobby.
"I have been most struck by how invisible the issue has been as part of the public debate," Bill McInturff, a Republican pollster, told the New York Times. If voters don't "understand what it is and why it matters," he added, "it's unlikely to have much consequence in the campaign."
With The Post, the Times and "60 Minutes" all assuring us that White House Chief of Staff Rahm Emanuel is a political genius, this White House failure is truly befuddling. Surely, nothing is more vital to the economy's future, or to the Democrats' political fortunes, than to take on the banks, get them under control, provide consumers with some protection, and make banking a boring profession once again. http://www.washingtonpost.com/wp-dyn/content/article/2010/03/09/AR2010030901718_pf.html
Where the Jobs Went: Long Live Monoplies! The overlooked- and key- factor: For 29 years we’ve shelved the Sherman Anti-Trust Act, i.e. since the ascendancy of Reagan and his radical conservative handlers
…while the mystery of what killed the great American jobs machine has yielded no shortage of debatable answers, one of the more compelling potential explanations has been conspicuously absent from the national conversation: monopolization. The word itself feels anachronistic, a relic from the age of the Rockefellers and Carnegies. But the fact that the term has faded from our daily discourse doesn’t mean the thing itself has vanished—in fact, the opposite is true. In nearly every sector of our economy, far fewer firms control far greater shares of their markets than they did a generation ago.
Indeed, in the years after officials in the Reagan administration radically altered how our government enforces our antimonopoly laws, the American economy underwent a truly revolutionary restructuring. Four great waves of mergers and acquisitions—in the mid-1980s, early ’90s, late ’90s, and between 2003 and 2007—transformed America’s industrial landscape at least as much as globalization. Over the same two decades, meanwhile, the spread of mega-retailers like Wal-Mart and Home Depot and agricultural behemoths like Smithfield and Tyson’s resulted in a more piecemeal approach to consolidation, through the destruction or displacement of countless independent family-owned businesses.
It is now widely accepted among scholars that small businesses are responsible for most of the net job creation in the United States. It is also widely agreed that small businesses tend to be more inventive, producing more patents per employee, for example, than do larger firms. Less well established is what role concentration plays in suppressing new business formation and the expansion of existing businesses, along with the jobs and innovation that go with such growth. Evidence is growing, however, that the radical, wide-ranging consolidation of recent years has reduced job creation at both big and small firms simultaneously. http://www.washingtonmonthly.com/features/2010/1003.lynn-longman.html
Virginia: States Rights on the March South Carolinian John C. Calhoun, Mr. States Rights 1832, is smiling from the grave. Virginia is in the midst of a sharp counter- revolution which harkens back to days of post 1954 Virginia that had steadfastly refused to comply with the Brown v Board of Ed de-segregation decision. They’ve led the charge of conservative states who are now vowing to block any federal imposing of the individual insurance mandate, key to the Democrats’ health care legislation.
Aside from blocking health care, the new administration has been systematically removing anti-discrimination measures only recently provided for gay employees.
The administration of Virginia governor Bob McDonnell is doubling down on its anti-gay reputation, telling the state's colleges and universities to scrap policies that ban discrimination against gay employees.
In a letter to the state's institutions of higher learning, Attorney General Ken Cuccinelli argues that the schools lack the legal authority to ban anti-gay discrimination, because only the state legislature can do so, the Washington Post reported over the weekend. That's a step that the GOP-controlled legislature recently declined to take.
Last month, McDonnell, a socially conservative Republican, rescinded an executive order, promulgated by the previous governor, Democrat Tim Kaine, that prohibited discrimination against gay state workers.
… last month, Cuccinelli angered Democrats and environmentalists by filing suit against the EPA, alleging that it lacks the legal authority to regulate global warming pollution. He was one of several state attorneys general to do so. http://tpmmuckraker.talkingpointsmemo.com/2010/03/virginia_ag_to_state_colleges_scrap_protections_fo.php
Assault on Unemployment Benefits: It’s the New Welfare! Welfare has long been demonized by the Right; social insurance- Unemployment and Social Security- has endured less scorn. But, now:
…complaints that extending unemployment payments discourages job-seeking have begun to bubble into the political debate. Sen. Jim Bunning (R-Ky.) recently single-handedly held up the latest extension, a bill to keep unemployment benefits in place for another 30 days, saying Congress should find other cuts to cover its $10 billion price tag.
Sen. Jon Kyl (R-Ariz.) did not join Bunning's effort, but he defended his colleague's point of view. Kyl told the Senate he questioned why anyone would see unemployment benefits as helpful to the economy, or to the jobs market.
"If anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work," Kyl said. "I am sure most of them would like work and probably have tried to seek it, but you can't argue it is a job enhancer."
Andrew Stettner, deputy director of the National Employment Law Center, says there's a good reason people are out of work for so long. There are six unemployed Americans for every available job, he said.
"The primary reason people are out of work so long is a lack of jobs," Stettner said.
…"It is appropriate and natural for Congress to extend the time limit of unemployment insurance with the job market as bad as it is," said James Sherk, a labor economist at the Heritage Foundation. "But by quadrupling it, it is no longer an unemployment insurance program but a welfare program." http://www.washingtonpost.com/wp-dyn/content/article/2010/03/08/AR2010030804927.html?hpid=topnews
Japan Edges Toward China Adaptation. The ruling DPJ party is cozying up to China as they view the Chinese as having smarter trade, economic policies than the struggling U.S.
China is about to overtake Japan as the world's second-largest economy. The country's national debt has hit an awesome 180 per cent of gross domestic product, (un)comfortably the highest in the world among rich countries - and there is no credible plan in place to hack it back. Toyota, a company that used to embody Japan's reputation for quality, is enmeshed in a safety and public relations nightmare. Last year, the Japanese economy shrank by more than 5 per cent. And the high hopes that surrounded the reformist government of Yukio Hatoyama, the prime minister who was elected last summer, have quickly dissipated. Mr Hatoyama's approval ratings are sinking and the Japanese business and civil service establishment seem eager to dismiss him as an ineffectual clown.
How Japan reacts to this new sense of weakness - exaggerated though it may be - will matter to the whole world. The country's size and strategic importance make it critical to America's Pacific strategy and to China's geopolitical calculations.
As it adapts to Japan's new circumstances the Hatoyama government has, almost unwittingly, initiated a debate about the value of Japan's alliance with the US. Some western observers in Tokyo muse that perhaps Japan is once again following its historic policy of adapting to shifts in global politics by aligning itself with great powers. Before the first world war the country had a special relationship with Britain. In the inter-war period Japan allied itself with Germany. Since 1945, it has stuck closely to America. Perhaps the ground is being prepared for a new "special relationship" with China? http://www.ft.com/cms/s/0/74e9b3cc-2b1a-11df-93d8-00144feabdc0.html
Trade War with Brazil: Brazil moves to protect its industries; their tariffs have always been there- 20%, commonly, while ours is closer to 2%, long the practice here, especially since Clinton’s terms. Now the Brazilians are doubling it so as to protect their industries.
Brazil moved to raise tariffs on a wide range of American goods on Monday, potentially igniting a trade war with the US over cotton subsidies after eight years of litigation at the World Trade Organisation.
The decision takes effect next month, starting a 30-day period during which US and Brazilian officials will attempt to negotiate a solution to the dispute.
Under the Brazilian plan, duties would rise most steeply on cotton products. Many that are currently taxed at between 6 per cent and 35 per cent would be taxed at 100 per cent.
The tariffs on beauty products would double, from 18 per cent to 36 per cent. Duties on household goods such as cookers, refrigerators, TVs and video cameras would also double, from 20 per cent to 40 per cent. Duties on cars would rise from 35 per cent to 50 per cent.
Brazil is allowed to impose the tariff increases – worth $560m – after winning a case at the WTO last year. Brazil challenged the legality of direct subsidies to US cotton farmers to protect them against fluctuations in global prices and a loan guarantee programme for international buyers of US cotton. http://www.ft.com/cms/s/0/dbf4284c-2afa-11df-886b-00144feabdc0.html
Health Insurance/Care Reform: A Two-For? Stop (some) Insurance Abuses and Say Good bye to Rush Limbaugh?
I’ll just tell you this, if this passes and it’s five years from now and all that stuff gets implemented — I am leaving the country. I’ll go to Costa Rica. – Limbaugh http://thinkprogress.org/2010/03/09/limbaugh-exile-health-care/
-R
