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Governance As Bain Capitalism, Where American Workers Become Mitt’s Dog

10:29 am in Economy, Politics, Republican party by Scarecrow

The wealthy keepers of the Republican Party are in full panic mode since Mitt Romney foolishly put his brand of American capitalism on trial. Yes, he did it to himself. As soon as Romney made the ridiculous claim that his success at becoming rich from leveraged buy outs was his main qualification to be President, it was certain that his even dumber rivals would ask whether Mitt’s brand of capitalism was good for America or instead, “vultures” who were “looting” companies, enriching themselves and firing hapless workers.

Aware of the danger to the rigged game that makes a few fabulously wealthy at the expense of the many, the GOP’s financial elites must now invent fantastic narratives to defend “creative destruction”. This comes at a time when sensible voters are realizing they constitute the destruction part. What Romney helped create and successfully, ruthlessly, exploit was the enrichment of a favored few, including himself, while he and his friends became indifferent to the destruction of the middle class and American labor.

Of course, the questions Mitt himself raised are exactly what the country should be debating. After Wall Street’s self delusion and greed tanked the economy, throwing millions out of work and into fraud-laden foreclosures, the number one economic issue of our times should be whether the malefactors of wealth through financial engineering should be allowed anywhere near governmental power over the economy. Anything but a resounding “Are you nuts?!” is preposterous, so the next governance question is how do we exorcise these demons from the body politic.

The malefactors manipulated political influence in successive administrations via the heavily bribed corporate wings of both parties to bail themselves out with zero accountability. That they show little remorse and only token concern for their millions of victims only amplifies the issue’s primacy.

However he may resemble Gordon Gekko, you would think a man as clever or cynical as Romney would realize his becoming rich by putting corporate profits ahead of people while exacerbating the shameful disparity in income and wealth could become an automatic disqualification to lead a nation desperate to move in a different direction. But of course with enormous greed come enormous ego and equally enormous indifference to those who get strapped to the roof of the Mitt family wagon. As we watch Mitt-like GOP governors extend the destruction, it’s clear American labor is now Mitt’s dog.

It’s both amusing and appalling to hear Romney try to change the subject. He first whined that his rivals were attacking free enterprise or capitalism itself, and that would be “a terrible mistake for the party [no kidding!] and the country [hardly].”  Next he hid by saying this was just like Obama bailing out the auto industry, which of course Mitt had opposed. Even the Obama people could distinguish between actions designed solely to profit investors and those intended to save a strategically important American industry, its jobs and the economy. Private interests are not the same as public interests, but that’s what we should be clarifying this election. Too bad neither party seems to grasp this.

There’s a spate of right wing op-eds today asking whether Romney’s business experience qualifies him to be President. At WaPo, Robert Samuelson starts his column with that question, but then he ducks the answer when the examples from the Mitt era at Bain suggest it might not even have been a net good for business. Oh, my. So he just stops writing.

The Times David Brooks is even more embarrassed by the question and the evidence that drives the answer, so he too ducks. He diverts our attention by claiming that what we really need is not so much the CEO in politics but a President from the aristocratic class who looks to [Brooks'] God for guidance on how to govern America. I thought that was what Mitt and most of the GOP contenders were claiming for themselves. If only a just goddess actually used Zeus’ thunderbolts . . .

That leaves us with Paul Krugman’s dismissal in America is not a corporation.

But what really struck me was how Mr. Romney characterized President Obama’s actions: “He did it to try to save the business.” No, he didn’t; he did it to save the industry, and thereby to save jobs that would otherwise have been lost, deepening America’s slump. Does Mr. Romney understand the distinction?

America certainly needs better economic policies than it has right now — and while most of the blame for poor policies belongs to Republicans and their scorched-earth opposition to anything constructive, the president has made some important mistakes. But we’re not going to get better policies if the man sitting in the Oval Office next year sees his job as being that of engineering a leveraged buyout of America Inc.

More from the LA Times: Private Equity: Bad Rep, but Is it Deserved?

ABC This Week Panel: We’re in Crisis. Time for Tea-GOPers to “Grow Up”

8:41 am in Government, Legislature, Politics by Scarecrow

Oh my. If Amy Walters, George Will, and Major Garrett agree that Tea Party Republicans need to grow up before they wreck the US economy, maybe there’s hope . . . but not much. Follow the logic if you can:

First, Will opened by noting the Federal Government had bailed out Wall Street and the automakers, but now it faces the prospect of several states, including California (world’s 8th largest economy) declaring bankruptcy.

Next, Will disagreed with Amy Walters that the message from the elections was voters’ hope that everyone in D.C. could just get along and solve the country’s problems. The correct message, Will insisted, was that voters wanted the Tea-GOPs to “throw sand in the gears” and “make it stop.”

Finally, Will, Walters and Garrett agreed that John Boehner would have a problem getting his new Tea-troops to understand that sovereign nations shouldn’t needlessly default on their debt, which Will said would happen if Congress refused to raise the debt ceiling. He and Walters then repeated the theme that previous “no” votes on raising the ceiling were tolerated only because they weren’t the majority, but we’d have a serious financial crisis if there weren’t enough adults to override the crazies. My, my. Where have we heard that before?

In a rational, humane and grownup world, the US would, consistent with the view that the US Constitution was created to “form a more perfect union . . . ensure domestic tranquility . . . promote the general welfare . . .” be working hard to develop a plan to fund essential services that states could not afford to carry during a major economic downturn.

There would be sufficient federal funds to pick up the entire increase in unemployment insurance and Medicaid and other safety-net programs that explode when recessions occur and collapse state tax revenues.

There would be sufficient funding to keep states and local districts from laying off teachers, firemen, police, sanitation, health and other essential workers which states and cities struggle to fund when their own tax revenues collapse.

There would be funding to keep essential programs functioning, to keep infrastructure from collapsing, to keep parks and other civic amenities from deteriorating at a huge, irretrievable loss to their communities.

And these efforts would be linked to programs to put the unemployed back to work, doing all the things that state and local communities need done to keep things going now and to build the foundation for the next generation.

We’re in a national crisis playing out at the state and local level. We need a national crisis response that can only be led and funded at the federal level. That’s what the federal government is for. And that’s the agenda for the next Congress. It would require they become adults.

But to summarize the bipartisan Beltway view, while one of the most dangerous but solvable crises facing the country is the impending bankruptcy of several US states and the collapse of services in communities all over the country — welcome to Ireland and Greece — the Tea-GOP Party coming to power doesn’t have the slightest inclination to allow the federal government to respond but would prefer to “stop it, to throw sand in the gears.” And while this brings several US states crashing to the ground, the same Tea-GOPers think it’s fine to crash the US fiscal and financial system.

Where’s Richard Clarke? “US Taliban planning to attack America.” You’ve been warned.

Liz Warren Tells Only Half the Story

8:53 am in Uncategorized by Scarecrow

At FDL News, David Dayen covers an article on Elizabeth Warren in which she argues, correctly, that if the new Consumer Financial Protection Bureau had been up and running years ago, much of the banking/mortgage fraud could/would have been prevented.

That’s fine as far as it goes. But there’s something missing from the polite Ms. Warren’s telling.

I’d very much like to believe that if a relatively new and still energetic Consumer Financial Protection agency had been around a few years back, and if it had been led by a relentless consumer champion like Liz Warren, it would have flagged and likely limited much of the massive fraud committed by banks, mortgage lenders, servicers and securities bundlers, provided . . .

. . . provided it wasn’t interfered with by more powerful regulators whose job it was to stop fraudulent banking and lending practices instead of interfere with legitimate investigations by those with authority, including state regulators.

It is a pernicious myth, perpetuated by those in charge at the time (many still here), that the federal government was powerless to stop the financial crisis and all the fraud and looting that attended it. There was plenty of authority, but the people in charge chose to look the other way.

Just as bad, these complicit federal regulators aggressively stopped efforts by states to investigate and halt the fraudulent practices. In early hearings of the Financial Crisis Inquiry Commission, they interviewed numerous witnesses, including States’ Attorneys General and securities regulators from Texas, Illinois and other states who were empowered to investigate and stop fraud and began their own investigations. Several state officials and experts testified that their efforts were repeatedly stymied by federal bank regulators who, although willing to do nothing themselves to stop the rampant crime wave, insisted that states were preempted from even conducting their own investigations.

It is simply not true that there was no government defense against the massive fraud perpetrated by banks, mortgage originators and lenders, loan servicers, foreclosure mill law firms, and Wall Street securities/trusts marketers. All the authority the feds and states needed existed then to stop the reckless crime wave that eventually tanked the financial sector and has since victimized millions.

Federal regulators at the Federal Reserve, Treasury and OCC were complicit throughout. They chose not to do their jobs, and they’re just as guilty as the looters that still populate the nation’s financial sectors from top to bottom.

Yes, bring on the CFPB and put Liz in charge. We need its energy and new blood. But we also need to clear out the incumbent crooks who will do everything they can to tie her hands.

And don’t forget, that complicity permeates much of Congress and the entire Republican Party, whose representatives on the Financial Crisis Inquiry Commission recently issued their own minority report that ignores all of this history. And they’re insisting the Commission’s final report ban any references to “Wall Street,” “shadow banking,” “interconnection,” “deregulation” and other terms that might reveal an entire political ideology’s complicity in the largest, most egregious looting ever perpetrated.

Lessons in Accountability: Escrow Accounts for BP, Bailouts for Wall Street

9:47 am in Uncategorized by Scarecrow

The Administration tells the media and Sunday talk shows that President Obama will propose BP fund an independently administered "escrow account" to make sure BP pays all damage claims for which it should be held financially accountable.

From the New York Times:

President Obama for the first time will address the nation about the ongoing oil disaster in the Gulf of Mexico on Tuesday night and outline his plans to legally force BP executives to create an escrow account reserving billions of dollars to compensate businesses and individuals if the company does not do so on its own, a senior administration official said on Sunday.

“The president will use his legal authority to compel them,” said Robert Gibbs, the White House spokesman. . . .

The escrow account that the White House envisions would be roughly modeled after the fund established for victims of the terrorist attacks on Sept. 11, 2001, and it would be administered by a third party to provide greater independence and transparency and to guard against the company too narrowly defining who is entitled to payments and how much.

“We want to make sure that money is escrowed for the legitimate claims that are going to be, and are being made, by businesses down in the Gulf — people who’ve been damaged by this,” said David Axelrod, Mr. Obama’s senior White House strategist, on NBC’s “Meet the Press” television news program on Sunday. “And we want to make sure that that money is independently administered so that [they] won’t be slow-walked on these claims.” . . .

The BP board is to hold an emergency meeting on Monday at which it is expected to discuss both the escrow issue and other issues company officials will address in a meeting at the White House on Wednesday that Mr. Obama has summoned them to.

First impression, I like the escrow account mechanism and the accountability principle it embodies. We’ll have to see how it works, because it’s not clear how the escrow amounts would be determined, which damages would be included, or how BP’s obligations would be enforced.

There will surely be disagreements about what claims BP is legally or morally obligated to pay, such as the economic costs of the current legal moratorium on new deepwater permits and the de facto moratorium on new permits in shallow waters while new safety procedures are developed and imposed.

But think about the principles involved. We are watching the education of a President, and I doubt even this politically sensitive White House can foresee how far the lessons reach.

It would be interesting to apply what Obama should be learning to how he, Tim, Larry and Ben might have handled the financial crisis.

What if the US had held Wall Street to the same standards the Administration is now applying to BP, demanding that they and their shareholders/directors/CEOs be held personally liable and financially accountable for all the damage they did to the US economy, both collectively and to those millions who lost their jobs? How should we have set up and funded that "escrow" account or structured an appropriate transactions tax?

And suppose that in exchange for the Wall Street bailout to "save" the financial system, the US had demanded that no further Wall Street transactions occur of the types that proved to be far more risky than they claimed and which allowed them to claim they were too big and too interconnected to fail? Suppose all further unregulated, shadow transactions by the major TBTF entities had been subjected to a moratorium until we determined whether and how they can be done without unacceptable risks to our economy? And suppose we didn’t let any more go forward, at least at commercial banks, until we had completely reformed the regulatory oversight and cleaned out the incompetent/complicit regulatory management undermining our government for the last decade?

Unlike deepwater drilling, where our government’s top advisers claim ignorance of the technologies and risks, the financial Masters of the Universe in/out of government claimed to know what they were doing and told us it was okay, when it was a Gulf-size catastrophe for our economy just waiting to happen. What have they learned, and what have we learned about them? Why are they still in charge?

And we could ask the same questions about virtually every interaction between government and big businesses engaged in risky activities, from mines to chemicals, to drugs and on and on. We could ask about the shadow government agencies that still carries out and permits criminal behavior, all sanctioned by a Department of Justice still every bit as complicit as the Minerals Management Service.

I don’t know what this President and this Congress are learning, but I hope it’s that too much of the corporate world consists of rogue actors careening out of control and causing enormous damage, and that to rein them in is a policy priority. And let’s hope that broader effort is driven by a set of consistent principles based on respect for the law and the public interest.

John Chandley