Andy Kroll

Andy Kroll

Senior Reporter

Andy Kroll is Mother Jones' Dark Money reporter. He is based in the DC bureau. His work has also appeared at the Wall Street Journal, the Detroit News, the Guardian, the American Prospect, and TomDispatch.com, where he's an associate editor. Email him at akroll (at) motherjones (dot) com. He tweets at @AndrewKroll.

Get my RSS |

Rahm Emanuel Battles Fed Audit

| Tue May. 4, 2010 7:24 AM PDT

Sen. Bernie Sanders (I-Vt.), the lead sponsor of a new rule to audit the Federal Reserve, is running up against some formidable opposition from nearly all sides. Most notably, Sanders told the Huffington Post that his provision, which has a good chance of winning 60 or more votes in the Senate, is opposed by the White House, and that chief of staff Rahm Emanuel has pushing back against the Fed audit. "I think momentum is with us," Sanders told HuffPo. "But I've gotta tell you, that on this amendment, you're taking on all of Wall Street, you're taking on the Fed, obviously, and unfortunately you seem to be taking on the White House, as well. And that's a tough group to beat."

The amendment would allow the Government Accountabililty Office (GAO) unprecedented access to the Fed's records, and would require the opaque, hybrid public-private institution to disclose who received the $2 trillion given out in loans by the Fed since the onset of the financial crisis. To one's surprise, Fed chairman Ben Bernanke and his acolytes have vehemently opposed the provision, saying it would taint the Fed's decision-making with politics and partisanship.

Sanders, though, appears to have considerable support amongst his colleagues in the Senate. A similar provision to audit the Fed, the Sanders-Webb-Bunning-Feingold Amendment, won 59 votes in April 2009, and eight of the "No"s on that 2009 vote have signed onto Sanders' current amendment. And considering that the House passed a similar amendment last year, and that right now Sanders' amendment has the support of 69 senators, it looks as if the white-haired Vermont independent might get his Fed audit after all. The amendment could come up for a vote as early as today.

Advertise on MotherJones.com

Obama's "Most Wanted" Finance Loopholes

| Tue May. 4, 2010 6:34 AM PDT

The White House is targeting ten of what it has dubbed the "Most Wanted" lobbyist loopholes in the ongoing financial regulatory reform fight. Essentially these are the items big lobbying organizations, like the US Chamber of Commerce and the Financial Services Roundtable, are pushing hardest on in order to blunt the effects of new reforms. Here are the highlight from the "Most Wanted" list, penned by White House communications guru Dan Pfeiffer.

  1. Ok, Consumer Protection Rules are Fine...Just Don't Enforce Them. Lobbyists are pushing hard to amend the bill so that Attorneys General lose their enforcement authority. Why does that matter? Because the Bureau would only supervise larger market participants. Without state AG enforcement authority, the citizens of their states will have much less protection against illegal conduct. If you want to weaken consumer protections, that's one way to do it.

  2. Letting Non-Banks Play by a Weaker Set of Rules. We know this is coming, so keep an eye out: attempts to give car dealers that make car loans and other major providers of financial services a big exemption from the consumer protection rules. Now be aware: some people try to scare small businesses by saying that the consumer financial protection bureau will regulate main street businesses like orthodontists and florists. That is not true. But if a car dealer makes loans, or if a big department store sets up a financial services center, it’s doing what banks and credit unions do, and it should play by the same rules.

  3. Preventing States from Protecting Their Own Citizens. Under the current bill, the Bureau of Consumer Financial Protection would set minimum standards for the consumer finance market, but states would still be allowed to adopt additional protections. In other words, federal consumer protections would set a floor, not a ceiling. There’s likely to be a fight about that provision. Citing the doctrine of “preemption,” big banks will try to take away states’ ability to supplement federal consumer protections. Why is this a problem? Because state officials are often the first to learn of new abuses and new problems in the marketplace, and we should not get rid of that canary in the coal mine. Federal law can overrule or “preempt” state law when a state law would significantly interfere with national banks’ business of banking, but states should otherwise have the right to protect their citizens as they see fit.

  4. Preserving “Too Big to Fail” While Pretending to Kill It. The key to preventing future bailouts is to end the problem of “Too Big to Fail.” And the only way to do that is to make sure that we can shut down big financial firms in a swift, orderly way if they’re on the brink of failure. Of course, not everyone wants to see “Too Big to Fail” disappear, since it lets the biggest firms borrow money at lower cost and avoid the consequences of excessive risk-taking. But no one wants to be caught defending the status quo. So defenders of the status quo are using a sleight of hand: pushing to make the resolution process so unwieldy that it can never work. By proposing amendments that look tough but that make the resolution process unworkable, opponents of reform will try to save “Too Big to Fail” while pretending to kill it.

These are all important points from Pfeiffer, and all provisions or rules still in play as the financial reform debate hits full stride this week. Some of them we've already covered here at MoJo, with our "Five Fights to Watch" a few weeks ago. This week, the deluge of amendments to the financial reform bill will begin, as will votes on those amendments. Some of those amendments will seek to bolster the bill, like Sen. Byron Dorgan's (D-ND) which would give a new financial oversight council the power to break up overly big banks. Other amendments, likely from the Republican camp, will seek to pare down the council's too-big-to-fail oversight power and the independence of the proposed consumer agency. All in all, it'll be a bruiser of a week on the path toward rewriting the rules of our financial system.

 

BP Disaster a Case of Spilt Milk?

| Mon May. 3, 2010 8:18 AM PDT

If you haven't heard of Mississippi congressman Gene Taylor (and odds are you haven't), then here's a doozy of a first impression: In an interview with a Biloxi television station, Taylor compared the massive oil spill in the Gulf of Mexico to a mere case of spilt chocolate milk. According to a transcript of the interview posted by ThinkProgress, Taylor downplayed the seriousness of the BP spill—which is releasing 210,000 gallons of crude oil daily into the gulf, according to the National Oceanic and Atmospheric Administration—saying, "This isn't Katrina. This is not Armageddon." Taylor goes on to say:

I did this for the Coast Guard many years ago. Yeah, it’s bad. And it’s terrible that there’s a spill out there. But I would remind people that the oil is twenty miles from any marsh...That chocolate milk looking spill starts breaking up in smaller pieces...It is tending to break up naturally.

Naturally, ThinkProgress points out, Taylor is a supporter of offshore oil drilling and voted against the House's comprehensive energy bill last year. He also counts the energy and natural resources industries among his top donors, according to the Center for Responsive Politics. While the extent of the spill is still elusive to government officials, who've had little success getting the leaking oil under control, a chocolate milk spill is hardly how they or the Gulf coast residents, soon to have their wetlands and beaches coated in oil, would characterize what the president himself has described as a national emergency.

HAMP Architect Bails from Treasury

| Mon May. 3, 2010 6:46 AM PDT

Seth Wheeler, a top adviser in the Treasury Department, has left his post in Obama administration, Debtwire reported (pdf), a noteworthy fact because Wheeler was an architect of the administration's poorly designed, ineffective, and much maligned homeowner relief program that experts say has been a bust. A holdover from the Bush administration, Wheeler played a large role is designing the $75 billion Home Affordable Modification Program, the administration's flagship effort to slow the pace of new foreclosures across the country.

HAMP, however, has been roundly blasted by lawmakers, congressional watchdogs, and outside experts. Initially expected to help 3 to 4 million homeowners, a mere 230,000 homeowners had received permanent modifications to their mortgage payments; by contrast, there were 2.8 million foreclosure filings in 2009, and nearly 3 million are projected for 2010. The latest report from the special inspector general for the bailout, known as SIGTARP, said, "Until Treasury fulfills its commitment to provide a thoughtfully designed, consistently administered, and fully transparent program, HAMP risks being remembered not for catalyzing a recovery from our current housing crisis, but rather for bold announcements, modest goals, and meager results."

It's unclear why Wheeler left the Treasury just over a year into HAMP. One investor told Debtwire, "It looked like he just couldn't get things done, and he was very frustrated." Interestingly, Wheeler tendered his resignation on April 15, Debtwire notes, a day after an April 14 hearing held by the House financial services committee in which HAMP was more or less eviscerated by committee members. Was the onslaught of criticism in that hearing the final straw for a frustrated Wheeler?

Goldman Gets the Criminal Treatment

| Fri Apr. 30, 2010 8:08 AM PDT

If you're Rep. Marcy Kaptur or the 61 other congressmen—or, for that matter, the 140,000 petition signers—then you've got to feel pretty powerful right now. Yesterday, Kaptur hand-delivered a letter to the Justice Department calling for a criminal investigation of Goldman Sachs, the besieged investment firm facing fraud charges for a complicated 2007 deal gone bad. Less than 24 hours later, reports emerged that the federal prosecutors have opened a preliminary criminal inquiry into Goldman's trading activities.

The case was referred to the Southern District of New York prosecutor's office by the Securities and Exchange Commission, which filed a securities fraud suit against Goldman two weeks ago. The SEC's suit alleges that Goldman misled investors by not disclosing that a hedge fund trader who wanted to bet against a product of Goldman's making had influenced what went into the product, called a synthetic collateralized debt obligation (CDO). Essentially, the SEC says that the hedge fund trader, John Paulson, got to rig the CDO so that his bet against it was almost certain to pay out. (It did: Paulson ended up making $1 billion, while the two investors who invested in the CDO, called Abacus, lost roughly the same amount.)

Right now, the criminal investigation of Goldman is in the early stages. It's also worth noting that the burden of proof in a criminal case like this is higher than in a civil suit, like the SEC's, meaning federal prosecutors have their work cut out for them to show blatant wrongdoing by Goldman. Nevertheless, today's reports cap arguably one of the worst weeks in Goldman's history. The firm's top brass were grilled by Senate lawmakers on Tuesday, the company's stock has slumped, and a pair of shareholders filed what's projected to be the first of multiple shareholder suits against Goldman. The worst, it seems, could still be on the horizon.

Mon Jan. 13, 2014 10:19 AM PST
Mon Dec. 16, 2013 7:47 AM PST
Fri Oct. 18, 2013 9:12 AM PDT
Wed Sep. 11, 2013 9:44 AM PDT