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.
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?
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.
On the opening day of debate over legislation that would rewrite the rules of the financial markets, Sen. Richard Shelby (R-Ala.) all but disavowed the bill, claiming it wouldn't fix anything—and would in fact hurt the US economy. Here's why that's shocking: Shelby, the top GOP negotiator on financial reform, has been working on the bill with his counterpart, Sen. Chris Dodd (D-Conn.), for more than three years. Dodd and Shelby have been engaged in grueling, closed-door negotiations for months. No Republican has more invested in the bill than Shelby.
Yet today on the Senate floor, Shelby pretty much eviscerated the measure, while a red-faced and anxious-looking Chris Dodd sat across the aisle from the Alabama senator. "This bill threatens our economy," Shelby said. He added that the bill would leave taxpayers on the hook for future bailouts; the derivatives provisions would impair the economy; a new consumer bureau would stifle consumer lending; and a proposed Office of Financial Research, which would gather financial data used to predict future financial crises, would pry into Americans' lives and violate their civil liberties.
After Shelby finished his opening remarks, Dodd replied tepidly, half-jokingly, "Other than what you just heard from my colleague in Alabama, he likes the bill." It's doubtful whether Dodd actually believes that; anyone who heard Shelby's remarks doesn't. Does this mean all those months of talks between Dodd and Shelby were for naught? Possibly. Are Democrats and Republicans back at square one on financial reform? Sure looks like it.
All-star, that is, if you're rooting against comprehensive financial regulatory reform and don't want Congress to rein in excessive bonuses, risky speculating, and financial chicanery. On the day the Senate is slated to begin debating its Wall Street overhaul, the Washington Post sheds some light on the lobbying crew Goldman Sachs has assembled to fight reform and make sure whatever changes the Senate wants don't damage the firm's bottom line. Their lobbying team looks like a who's-who of financially-connected politicos with ample connections throughout Washington. Consider it the Yankees—or, if you're a soccer fan like me, the Real Madrid—of financial lobbying, the best money can buy.
Leading Goldman's lobbying shop is Michael Paese, a former aide to Rep. Barney Frank (D-Mass.), the powerful chairman of the House financial services committee. Frank's committee largely crafted the House's version of financial reform legislation, and will play a huge role in reconciling the House and Senate's bills likely later this spring. Frank, the Post reported, banned Paese from lobbying his committee for two years, just as the chairman more recently banned a former aide, Peter Roberson, who left the committee to lobby for the derivatives industry.
Filling out Goldman's lobbying roster are more familiar names like Dick Gephardt, the populist former Democratic majority leader turned Big Finance shill. Harold Ford Jr., the telegenic former Tennessee congressman, who recently mulled a Senate run in New York and did time with Merrill Lynch, is also lobbying for Goldman now. A few more well-connected Goldman lobbyists:
Faryar Shirzad, a former economic aide to George W. Bush
Joe Wall, a former legislative affairs aide to Dick Cheney
Richard Roberts, who's served as a powerful Securities and Exchange Commission commissioner and aide to Sen. Richard Shelby (R-Ala.), a top GOPer on financial reform
Eric Edwards, formerly a staff director on a House financial services committee's subcommittee
It's a star-studded lineup, to be sure. That said, with public ire against Goldman rising, its reputation sinking, and even President Obama shunning the firm, even the Yankees of lobbying will have their work cut out for them.