The Midmorning Refill: House’s new banking chair says he’s there to ‘serve the banks’

Today’s Flickr photo

The Barkhor in Lhasa, Tibet. Flickr photo by Alex '77.

If you read one thing today . . .

This is a late entry but this gem from Rep. Spencer Bachus (R-Ala.) might very well be the quote of the year. Bachus, the incoming chairman of the House Financial Services Committee, clearly gives a new meaning to the phrase “letting the fox guard the hen house.” Bachus told Mary Orndoff of the Birmingham News , it’s the banks, not Congress that should be calling the shots. This despite the fact it’s those same Wall Street bankers who drove our economy into the ground with their reckless deal making.

Bachus, in an interview Wednesday night, said he brings a “main street” perspective to the committee, as opposed to Wall Street.

“In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks,” he said.

He later clarified his comment to say that regulators should set the parameters in which banks operate but not micromanage them.

Overheard

Kevin Sessums with The Daily Beast interviewed Kevin Spacey about his new film “Casino Jack,” which is about everybody’s  favorite disgraced K Street lobbyist Jack Abramoff. Spacey on fact being stranger than fiction:

But these kinds of stories based on real events—like Recount and now Casino Jack—are filled with characters that are so larger than life and the decisions and judgments are so outrageous and the excesses even more outrageous when money and power and influence become such an integral part of the political process. All of that is so crazy that it is inherently funny. You couldn’t f*#king write this shit. It’s far more funny because it is real. We’re not making this stuff up. This shit happened.

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The Midmorning Refill: If Democrats and GOP voters agree on one thing, it’s that Wall Street is to blame

Today’s Flickr photo

Flickr photo by philroeder

If you read one thing today . . .

Markos Moulitsas on the Daily Kos highlights some interesting exit polling from the midterm elections. More voters blamed Wall Street for our economic woes than either Barack Obama or George W. Bush. But among those who blamed Bush, 83 percent were Democrats and among those who blamed Obama, 91 percent were Republicans. No surprise there. What is puzzling, as Markos points out is that even though a lot of Republicans blamed Wall Street, it didn’t stop them from voting for GOP candidates who, by and large, push a pro-Wall Street agenda.

So why is that? It’s because people think there is no difference between the parties when it comes to the rich and powerful. And why should they? Obama’s finance team is essentially a branch office of Goldman Sachs and company. Treasury was more concerned with using HAMP as a way to protect the banks than help struggling homeowners stay in their homes. In a bizarre role reversal — the White House economic team tried to water down the finance reform bill that came out of Congress.

It’s not hard to see why people have gotten the sense that Democrats aren’t much better on Wall Street matters than Republicans (even if they are).

Overheard:

This whole new Wisconsin paradigm will take some getting used to. Red state? Wisconsin? Anyways, this once progressive bastion is now filled with legislators who want to tell the federal government where it can stick its socialized health care. Kevin Sack in the New York Times says the opposition to health care reform helped fuel the GOP rise in Wisconsin, as well as other states. Wisconsin’s Gov.-elect Scott Walker says that on his first day in office, he’ll tell the state’ s attorney general to join a multi-state suit challenging the constitutionality of Obama’s health care reform.

“I think the more free-market the better,” Mr. Walker, the Milwaukee County executive, said in an interview. “I think history has repeatedly shown the more the government gets involved the more it not only distorts the marketplace but the more likely it is to inflate costs.”

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The Midmorning Refill: Done with government oversight

If you read one thing today . . .

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Overheard:

Despite the Dow Jones Industrial Average bouncing back to where it was before the 2008 economic crisis and despite big profits being reported by many of the companies that were bailed out by the federal government, investors around the world are not too keen on the Obama administration, according to a Bloomberg article by Mike Dorning. It seems the only thing that might make them happy is complete global deregulation.

“The uncertainty around the administration’s approach to dealing with businesses and the lack of clarity on taxes has created an environment where companies are less likely to make incremental investments, which in turn is bad for future corporate profits and hence the investment climate,” says poll respondent Quinten Stevens, 46, managing partner of Stevens Asset Management LLC in Darien, Connecticut. “Hopefully, the recent election results will be a powerful wake-up call to significantly change their approach towards the private sector.”

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New GOP House majority looking to hand the reins back to Wall Street

Arkush

Today’s Financial Times reports that Rep. Spencer Bachus (R-Ala.), who plans to chair the House Committee on Financial Services, is urging watchdog agencies to ignore the law and let Wall Street run wild again – and with taxpayer money to boot.

Bachus wants the big banks to keep up the government-subsidized gambling that crashed the economy and cost millions of jobs. His position flatly contradicts the Volcker rule in the new Wall Street reform law, and it’s the wrong direction for the country.

If Bachus plans to take direction from Wall Street lobbyists and give the big banks more financial wrecking balls rather than make the economy work for ordinary Americans, we can expect more financial crises, more big bank bailouts and more lost jobs.

He should reconsider and commit himself to serving the public, not helping the likes of Bank of America, JPMorgan Chase and Goldman Sachs set new records for profits and bonuses.

David Arkush is director of Public Citizen’s Congress Watch division.

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Inside Job — how Wall Street and the federal government conspired to wreck our economy

The trailer for the new Charles Ferguson documentary, Inside Job, looks great. The movie, which is narrated by Matt Damon, looks at the causes behind the 2008 economic meltdown, i.e. the financial deregulation that began with Reagan, the insatiable greed on Wall Street and the complicity of federal regulators who turned a blind eye to Wall Street’s reckless behavior. The movie had a limited opening this past weekend.

The documentary, which a group of critics voted the best film at the 2010 Cannes film festival, was also praised by Roger Ebert, who called it a “devastating” indictment of Wall Street:

It is a very angry, very carefully argued, brutally clear documentary about how the American financial industry set out deliberately to defraud the ordinary American investor. It was directed by Charles Ferguson (below), whose academic, business and government backgrounds make him unusually well-qualified for this subject. The remorseless narration is by Matt Damon.

Here is the argument of the film, in four sentences. From Roosevelt until Reagan, the American economy enjoyed 40 years of stability, prosperity and growth. Beginning with Reagan’s moves against financial regulation, that sound base has been progressively eroded. The crucial federal error (in administrations of both parties) was to allow financial institutions to trade on their own behalf. Today many large trading banks are betting against their own customers.

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Rumored Warren role in new Consumer Financial Protection Bureau is welcome news

Warren

From David Arkush, director of Public Citizen’s Congress Watch Division:

Reports that President Barack Obama will give Elizabeth Warren a major role in establishing the new Consumer Financial Protection Bureau are welcome news. Warren offers the promise of what financial consumers need most – a tough advocate to clean up an industry that has made unfairness and deception its core business model.

The details of the post are unclear, but early indications are positive. Warren would serve as an assistant to the president and a special advisor to Treasury Secretary Timothy Geithner. It is important that Warren answer directly to the president and have his ear, not merely work within the Treasury Department.

We are disappointed that the president has not nominated Warren to direct the agency. It is understandable that some might view confirmation as difficult at present, given Senate Republicans’ persistent and arbitrary obstruction of so many nominees. But Warren is confirmable, and a fight over her confirmation is worth having. The big banks and their supporters in Senate would be foolish to oppose her with the American public watching. Warren would emerge from the fight not only confirmed, but even better known and therefore strengthened as a national champion for consumers. We urge President Obama to nominate her.

Note: Public Citizen launched a petition drive urging Obama to nominate Warren to run the new consumer financial protection agency. Last month, we delivered more than 15,000 signatures to the White House.

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Congress passes financial reform but much more must be done to rein in Wall Street

More than a year and a half after Wall Street crashed the global economy, Congress has finally taken important action to rein in the Wall Street titans. The Wall Street reform bill is a crucial first step, passed despite the financial sector’s enormous investments in lobbying and campaign contributions. But Wall Street remains far too powerful in Washington, with the result that this bill does not contain crucial reforms that must be included in subsequent reform efforts.

On the positive side of the ledger, the bill contains stronger consumer financial protections and curbs on some of the worst practices in the derivatives markets.

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House passes financial reform; Senate is on deck

The U.S. House of Representatives brought us one step closer to meaningful financial reform Wednesday when it voted (mostly on party lines, with only three Republicans supporting the bill) to pass the  conference report on the Wall Street Reform and Consumer Protection Act. David Arkush, director of Public Citizen’s Congress Watch division, called it “a significant, initial victory for Main Street over Wall Street.” While there is still much more to do to rein in Wall Street’s reckless behavior, the financial reform bill offers a couple significant steps forward, Arkush said:

The two most notable are substantially stronger consumer financial protections and curbs on some of the worst practices in the derivatives markets.

The Senate is expected to vote on the conference report after the holiday break.  Chris Bowers at Open Left offers an in-depth analysis:

If the bill is defeated by pro-Wall Street forces over the next two weeks, the only parts which will be defeated are the victories, while all of its shortcomings will remain in place. If it is defeated, the 1999 financial deregulation package will remain the basic framework under which our financial system operates, and we all know how that worked out.

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Round 1 goes to the banks, more to come

The Senate resumes debate today on the Wall Street reform bill, having late last Thursday rejected probably the most important measure proposed to reduce Wall Street power, strengthen financial stability and fortify our democracy: breaking up the banks.

By a 33-61 vote, the Senate defeated the Brown-Kaufman amendment, which would have forced the largest banks to get smaller. Three Republicans, including Richard Shelby, the ranking member of the Banking Committee, joined 30 Democrats in supporting the measure.

This was a very big deal loss. But things aren’t over by any means.

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Make your senators go on record

When consumers make investments, we don’t get government-backed guarantees. Goldman Sachs shouldn’t either.

Readers, you can help us stop Goldman and other Wall Street banks from getting government support for their risky trades.

The Merkley-Levin amendment – cosponsored by Sens. Jeff Merkley (D-Ore.) and Carl Levin (D-Mich.) – to the Wall Street reform bill would stop government-backed banks from engaging in risky trading. It would also stop big banks from making Goldman-Sachs-style bets against their own clients.

Here’s how you can help. We’ve set up a public “whip chart” where you can see where your senators stand on this issue. We’re asking you to make a quick call to your senators’ offices to find out whether they support, oppose or are undecided on the Merkley-Levin amendment (there’s a short script on this page). After you make the call, you can use the page to report your senators’ postions. 

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