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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DoD Enters Consumer Agency Fray

| Tue Mar. 9, 2010 2:01 PM EST

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.

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Heidi Montag for Consumer Protection!

| Tue Mar. 9, 2010 1:08 PM EST

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 3:51 PM EST

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 8:10 AM EST

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.

Reid Still Confident on Financial Reform

| Fri Mar. 5, 2010 2:19 PM EST

Despite the glacial pace of financial-reform negotiations in the Senate—the banking committee, led by Sen. Chris Dodd (D-Conn.), was expected to release its bill this week to no avail—the Senate Majority Leader Harry Reid (D-Nev.) remains confident Dodd and his GOP counterparts will still pass comprehensive financial reform. In response to a question on whether Reid feared the window of opportunity was closing to pass financial regulation, a Reid spokeswoman told Mother Jones Reid "is not" worried the chance to reform Wall Street is passing. "Years of reckless actions by Wall Street put our economy on the brink of collapse, and the American people are paying the price," the Reid spokeswoman added. "It is essential that we bring reform to our financial system to ensure that this does not happen again. We look forward to the Banking Committee completing its work to move this legislation forward."

While the Majority Leader has largely been trying to round up enough Senate support to pass comprehensive health-care reform, he has voiced support for Dodd's effort to overhaul Wall Street. Last month, Reid told reporters that he was "comfortable we are going to be able to do a really good financial regulation bill." Reid's support comes as outsiders fear the chance to rein in Wall Street and its risky behaviors is slipping away, that the memory of 2008 and 2009's financial crisis is already fading in public's memory and the urgency that accompanies every crisis is dwindling with it. "Meaningful regulatory change is urgent now because this is the window of opportunity," says Simon Johnson, former chief economist at the International Monetary Fund economist. "If that window closes, we're asking for trouble."

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