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.

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GOP: Aim Low on Wall St. Reform

| Tue Mar. 9, 2010 12:41 PM PST

That's the message coming from the GOP's lead negotiator in the Senate on a new Wall Street crackdown. Today Sen. Bob Corker (R-Tenn.), on CNBC to talk about the state of play in the Senate banking committee's financial-reform negotiations, said no one should get their hopes up for a bill that tackles all parts of the financial-reform equation. "I don't think we oughta try to pass legislation that solves every problem in the world," Corker said. "I think when we do that we end up with things like [what] is happening right now with health care reform." The junior senator from Tennessee added that a "middle of the road"—not too far to the left or the right—and "very solid" bill was the best outcome for the Senate banking committee, which has been embroiled in financial-reform talks for months now. (Below is the CNBC video, with more after it.)

On the one hand, Corker makes a fair point. Politics is compromise, and if the Democrats and Republicans on the banking committee try to inject their own ideologies into financial reform, we'll still be waiting for the banking committee to release a bill in November. That said, a crisis, to borrow the well-worn adage, is a terrible thing to waste, and the financial crisis of 2008 and 2009 offered a once-in-a-generation opportunity for lawmakers to put aside partisan differences and pass a comprehensive, historic bill. That bill would do away with the government's implicit bailout guarantee, protect consumers, shed some light on the derivatives industry, and try to end what Simon Johnson, former IMF chief economist, has called the "doom cycle."

That window of opportunity, however, looks to have passed. Odds are, if and when the dust settles and a financial-reform bill lands on President Obama's desk, that legislation will do far less than originally anticipated and possibly represent a victory for the financial services community. Sen. Corker's comments today are further confirmation (if you needed more) that any chances of a major overhaul have disappeared.

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DoD Enters Consumer Agency Fray

| Tue Mar. 9, 2010 11:01 AM PST

You know the fight for financial reform has truly hit a fever pitch when the Defense Department, the monolith of the US government, has entered the ring. Not to be outdone by auto-industry lobbyists, the Pentagon has begun to lobby the Senate banking committee to convince them, including chairman Sen. Chris Dodd (D-Conn.), that any new consumer-protection agency should oversee auto dealers as well as banks and non-banking companies like subprime mortgage lenders, Politico reports. The DoD insists that any new consumer agency regulate dealers due to numerous reports of car salesmen preying on members of the military—a tactic Mother Jones' own Stephanie Mencimer reported in detail on last summer. And because the House's version of financial-reform exempted auto dealers from a consumer agency's oversight, the DoD is pushing hard to make sure the Senate doesn't include the same loophole.

The Pentagon's push came most notably in a February 26 letter from Clifford Stanley, an undersecretary of defense, citing auto dealers' "unscrupulous" practices toward members of the military. A consumer advocate added, "Predatory lending affects our military preparedness...It explains that this is not just some liberal position." A spokesman from the National Automotive Dealers Association told Politico that the practices decried by the DoD are already outlawed, and that a new consumer agency would only increase bureaucratic bloat in Washington. "Creating new regulatory mandates on top of existing federal and state statutes will likely drive up costs, limit vehicle financing options and, for many consumers including service members, effectively eliminate their ability to obtain financing to meet their vehicle need," the spokesman said.

Heidi Montag for Consumer Protection!

| Tue Mar. 9, 2010 10:08 AM PST

Yes, you read that correctly. The movement for a strong, independent consumer-protection agency has officially reached quasi-celebrity status. Heidi Montag, the reality TV mainstay and failed pop singer, is in a new, tongue-in-cheek video stumping for an independent consumer-protection agency as Congress' financial-reform talks slog on. The video, put together by the online humor site Funny or Die and Americans for Financial Reform, shows Montag poking fun at her recent plastic-surgery marathon while decrying the predatory practices of credit-card companies at the same time ("With hidden fees and standard interest-rate increases, that $11,000 jawline could end up costing you upwards of $50,000"). Now, I'm no celebrity gossip fan, and have no patience for people famous for no discernable reason whatsoever, but this video is clever, pretty damn funny, and worth watching. Here it is:

 


Incarceration in the Age of Obama

| Mon Mar. 8, 2010 12:51 PM PST

California is, as the time-worn adage has it, our nation's bellwether, and nowhere is that truer than in the Golden State's prison crisis. California's inmate population is among the highest in the nation. Its complex of prisons spills over with tens of thousands of inmates housed in every available inch of space and sleep-stacked three-high. So overcrowded are California's prisons that the state penal system has been successfully sued for violating the constitutional rights of inmates—essentially by subjecting them to a public-health crisis. That its inmates consistently resort to violence in prison should come as no surprise.

The dire state of California's prisons can, in part, be traced to its draconian "three-strikes law," which throws three-time felons behind bars for a mandatory 25 years. Overflowing prison populations have, in turn, contributed to that state's bleak economic future, helping consign California to a perpetual budget deficit, annual financial crises, and repeated deep cuts in education and social funding. The state currently spends a staggering 10% of its annual operating budget, or $10.8 billion, on its prison system and its nearly 170,000 prisoners—more than it spends on the University of California system, once the jewel in the crown of American public higher education.


Dodd, Fed Scourge, Makes U-Turn

| Mon Mar. 8, 2010 5:10 AM PST

Despite rampant criticism and open attacks on its leader, the Federal Reserve could emerge a winner in the Senate's long slog toward financial-reform legislation. The latest news from the Senate banking committee's ongoing negotiations, led by chairman Sen. Chris Dodd (D-Conn.), is that the Fed will retain oversight power for the nation's biggest banks—the 23 institutions with more than $100 billion in assets—according to a Sunday night report from the Financial Times (sub req'd). Banks with less than $100 billion in assets will potentially fall under the oversight of a new, centralized super-regulator, which would mean a victory for Dodd who included a super-regulator in his November reform draft. Among the losers would be the Fed's branch banks spread throughout the nation, whose authority right now includes mid-sized banks. 

For Dodd, the move to keep big-bank authority with the Fed and its embattled chairman, Ben Bernanke, marks a startling reversal. Last year, Dodd was the scourge of the Fed, calling its consumer-protection and bank-oversight performance in the run-up to the crisis "an abysmal failure." His apparent U-turn on the Fed's role is undoubtedly a conciliatory move to win bipartisan support with his main negotiating partner, Sen. Bob Corker (R-Tenn.), who has backed giving more power to the Fed. Doing so, however, will rankle consumer advocates who have lambasted the Fed for its utter failure to prevent the subprime mortgage collapse and the global financial meltdown.

The Financial Times story included additional updates on the state of the Senate's talks:

A new "resolution" regime to deal with failing, but systemically important, institutions would allow the government to wind up a company quickly to avoid contagion spreading through the financial system.

But in a concession to Republican fears about giving government too much power over business, a bankruptcy judge would provide checks and balances.

The regime is designed to prevent a repeat of the costly bail-out of AIG or the damaging bankruptcy of Lehman Brothers.

But Democrats have had to come up with a complex system that incorporates a role for the judiciary to meet Republican concerns, while also limiting the time and scope of a judge’s intervention to prevent an unruly process that infects the entire financial system.

If these latest leaked reports are true, then that means the Senate talks are nearing their conclusion, with the fate of a consumer-protection agency one of the few remaining hurdles. Expect to see a bill emerge out of the banking committee sometime this week.

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