The Midmorning Refill: While middle-class feels the pain, Wall Street laughs all the way to the bank

Today’s Flickr photo

A winter postcard from Cambridge, England. Flickr photo by .mush_king.

 

If you read one thing today . . .

Economist Dean Baker in the Talking Points Memo builds the case for a financial speculatin tax on stock market trades — a move that could raise $150 billion a year from Wall Street banks. It only seems fair that when the rest of us are worrying about our jobs and making mortgage payments that Wall Street “share the pain.” Not likely. Despite the recession, the banks, thanks mostly to a government bailout, are turning out huge profits and once again ready to  pay out obscene bonuses.

What is really great about a financial speculation tax is that the Wall Street banks would pay almost the entire tax. The economics on this is very simple. If a tax makes trading shares of stock, options, or other assets more expensive than people will trade less. For example, if a tax doubles the price of trading shares of stock, research shows that people will trade roughly half as much.

This means that investors will spend roughly the same amount on their trading with the tax as they did without the tax. They will pay twice as much per trade, but since they trade half as frequently, they end up paying the same amount on their trading.

Instead the cost of the tax will be born by Wall Street. The banks will have to absorb pretty much the full cost of the tax. This explains why prominent people in Washington have so little interest in financial speculation tax.

Overheard

Adam Liptak in the NYT looks at the U.S. Chamber of Commerce’s success arguing cases before the U.S. Supreme Court. Not surprisingly, big business has done extremely well.

“The Roberts court appears to be a mainstream, traditional, modern Republican, conservative court,” said Bradley W. Joondeph, a law professor at Santa Clara University and a former law clerk to Justice Sandra Day O’Connor. “Part of its constellation of commitments is against the regulation of business and, in particular, the regulation of business through litigation.”

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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 Obama plans to reach out to Chamber of Commerce, he should watch his fingers

Today’s Flickr photo

New members of the 112th Congress met on Capitol Hill Friday morning. Flickr photo by TalkMediaNews.

If you read one thing today . . .

Think Progress’ Lee Fang has a nice reminder of the U.S. Chamber of Commerce’s history of putting corporate interests over the public interest. President Obama, who is reported to be considering giving a speech at the Chamber, might want to be wary of burying the hatchet with this group.

The Chamber does not represent the entire American business community — not by a long shot. Although the Chamber has misrepresented itself and claimed to represent 3 million businesses (later modified to 300,000 after a Mother Jones exposé), in reality it actually represents a small group of multinational corporations. In 2008, half of its donations came from just 45 corporate donors. In 2009, nearly half of the Chamber’s money came from a single donation from the health insurance industry trade association. Moreover, the Chamber doesn’t appear to truly care about jobs or small businesses — evidenced by the fact that the Chamber killed legislation to create millions of new clean energy jobs and expand America’s competitive advantage in clean energy technology.

As ThinkProgress has noted, journalists often give undue credit to the Chamber as the “voice for business” simply because the Chamber is an old institution, they associate it with separate and distinct local Chambers that actually represent small businesses, and because the U.S. Chamber has one of the most sophisticated media outreach programs in Washington, D.C. But the Chamber does not deserve such respect, either from journalists or President Obama.

Overheard:

Journalists David Sirota and Matt Taibbi knocked back some drinks recently and wondered why none of Wall Street’s crooks never seem to get their comeuppance. Taibbi, who writes for Rolling Stone, was in Denver on tour for his new book “Griftopia,” which looks at how Wall Street greed drove the economy into the ground with virtually no consequences for the perpetrators. So, are the Wall Street grifters untouchable?

“They’re not afraid because other than Bernie Madoff, when was the last time someone on Wall Street faced any real punishment?” [Taibbi] responded. “Sure, a few go to jail once in a while, but they’re usually out in a few months and then on the speaking circuit. That’s not exactly a deterrent against bad behavior that’s making you millions.”

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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: Sarah Palin is against government bailouts when she isn’t for them

Today’s Flickr photo

Scroll with signatures collected by the Monahan brothers who walked across the country to protest the Citizens United ruling. Flickr photo by M.V. Jantzen

If you read one thing today . . .

It’s pretty clear that Tea Party matriarch Sarah Palin  is no lover of Big Government or big bailouts. Except, she was for the bailouts before she was against them. David Corn in Mother Jones has an interesting look at the old Sarah’s defense of bailouts and the new Sarah’s displeasure.

Palin went further this summer, when she contended that Alaska Sen. Lisa Murkowski’s support for the bailout was grounds for voting against her. Palin was backing Joe Miller in the GOP primary against Murkowski. In an endorsement message for Miller posted on her Facebook page in August, Palin, bashing Murkowski as a faux Republican, declared,

Alaska deserves a senator who will not talk one way in the Last Frontier and then vote the opposite way in the Beltway. It’s time for Alaskans who are concerned about endless bailouts, ever increasing debt and deficits, and the government take-over of health care (all planks Lisa Murkowski has walked) to get behind Joe Miller.

Palin added, “We know Joe won’t support more bailouts, but we know Lisa already has.”

In less than two years, Palin had gone from endorsing the bailout to using it as ammo to slam a fellow Republican who had also supported TARP.

Overheard

That nervous rattling you hear is coming from the U.S. Capitol where those up for election in 2012 who must feel like they have targets painted on their chest after watching so many incumbents and party favorites bite the dust during the midterm primaries and general election. Call it the Tea Party effect. Politico’s Manu Raju writes that several veteran Republicans and Democrats are worried. Missouri Democrat Claire McCaskill, who faces the prospect of running in a solid red state, is stressing her independence:

“I don’t think you have to be disloyal to President [Barack] Obama, to be independent,” said McCaskill, who is facing reelection in a state that Obama lost in 2008. “And I think that’s the message that I got to make sure that Missourians understand: that I haven’t been afraid to differ from Harry Reid; I have not been afraid to take on Nancy Pelosi; I have not been afraid to tell the president he is wrong. And that I have been the independent that I think most Missourians want.”

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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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Wall Street attempts sneakiness, fails.

Just two years after the Wall Street banks were bailed out and just three months after we passed a tough new law to rein them in, the Wall Street bankers want weak regulations so they can keep making risky bets with your money.

Because of the upcoming election, the banks apparently thought nobody would notice that they redeployed their horde of lobbyists to try to weaken the new rules as they’re being written.

They were wrong. We noticed. And we need your help to fight back.

Regulators with the Financial Stability Oversight Counsil are accepting public comments on the new law’s important “Volcker rule.” The rule is named for Paul Volcker, former chairman of the Federal Reserve and a vocal White House official who called on Congress to stop banks from making risky bets for their own profit while relying on taxpayer bailouts if the bets go bad.

Here’s how you can help:

1. Follow this link, and you’ll get to the page where you can submit a comment about the Volcker rule.

2. Next, cut and paste the SAMPLE COMMENT at the end of this post into the comment box. Fill out all the required information (First Name, Last Name, and Organization Name).

3. In the required field that asks for your “Organization Name” write “PUBLIC CITIZEN MEMBER.”

4. Click “Submit.”

The banks have already submitted their regulatory comments. Now it’s our turn!

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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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Want to see something really rich? Check out Wall Street’s pity party

Poverty is on the rise and the ranks of the uninsured in this country have swelled. But who is crying the loudest these days? Mostly the super-rich.  They’re whining about losing tax breaks and shouting at the rooftops about government’s attempt to regulate their reckless behavior — you know, the risky trading practices that crashed our economy and helped put us in the sad state of affairs we find ourselves in. Author Les Leopold finds the situation perplexing (HuffPo — Poverty Rises and Wall Street Billionaires Whine):

Is it really possible to make $900,000 an hour (not a typo — that’s what the top ten hedge fund managers take in), and still feel aggrieved about the way government is treating you? After you’ve been bailed out by the federal government to the tune of $10 trillion (also not a typo) in loans, asset swaps, liquidity and other guarantees, can you really still feel like an oppressed minority?

You’d think the Wall Street moguls would be thankful. Not just thankful — down on their knees kissing the ground taxpayers walk on and hollering hallelujah at the top of their lungs! These guys profited from puffing up the housing bubble, then got bailed out when the going got tough. (Please see The Looting of America for all the gory details.) Without taxpayer largess, these hedge fund honchos would be flat broke. Instead, they’re back to hauling in obscene profits.

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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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