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 Goes Solo on Financial Reform

| Thu Feb. 18, 2010 8:04 AM PST

Sen. Richard Shelby (R-AL), whose financial-reform negotiations with Senate banking committee chair Chris Dodd (D-CT) broke down recently, is crafting a Republican version of financial reform with other GOP senators on the banking committee, Bloomberg reported today. The ranking member on the banking committee, Shelby had previously led financial-reform talks with Dodd, but those talks ended with an "impasse" between the two lawmakers. (Dodd has proceded with the talks with Sen. Bob Corker (R-TN) since the schism.) Some attributed the breakdown to Shelby's opposition to a standalone Consumer Financial Protection Agency that would oversee financial products, like subprime mortgages, and would consolidate consumer protection in a single independent agency.

Shelby's new, GOP-only reform efforts, Bloomberg reported, would create a consumer protection division within an existing bank regulator, not a standalone agency. Shelby aides also told Bloomberg that the senator's version of financial reform would protect taxpayers from the cost of unwinding too-big-to-fail financial institutions. Also getting a look in Shelby's financial reform would be a consolidated bank regulator, an idea that's gaining steam in Dodd's financial-reform plans as well. Aides to Shelby said a lot of the details have yet to be ironed out, but that talks had been ongoing for a couple of months now.

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Senate Bank "Super Regulator" Gains Steam

| Thu Feb. 18, 2010 5:45 AM PST

The Senate's plan to create a "super regulator" through its financial reform package appears to be gaining momentum in Congress and the White House. The new watchdog, which would actually be a council of regulators, would be led by the Treasury Secretary and would assume responsibility for monitoring systemic risk in the financial markets, i.e., when a particular bank or several them become so interconnected and powerful that failure would pose a threat to the entire economy. The super-regulator plan, the New York Times reports, has a fair amount of support on both sides of the aisle in the Senate, including backing from Sen. Chris Dodd (D-CT), Sen. Mark Warner (D-VA), and Sen. David Vitter (R-LA). The details on the council are still fuzzy at this point as to who'd be on the council, but hopefully there will be updates on that soon.

A main point of contention with the super-regulator plan is that it would strip the Federal Reserve of much of its regulatory and systemic-risk powers, a move that's not surprisingly drawn the ire of the Fed's leaders and allies. Sen. Judd Gregg (R-NH) disagreed with giving away the Fed's bank oversight powers—which, as it's been widely reported, the Fed made scant use of—saying the Fed deserves to keep its bank-regulating role. Fed chairman Ben Bernanke said in October, however, that he supported a Treasury-led regulatory council, stressing the importance of moving "from an institution-by-institution supervisory approach to one that is attentive to the stability of the financial system as a whole," despite the consequences it would have on the Fed's role in watching over banks' products and practices.

The council of regulators proposal first surfaced in negotiations last summer, when the idea was first floated by the White House and the Treasury. That proposal, however, reserved far less power for the council—"You don't convene a committee to put out a fire," Treasury Secretary Tim Geithner said in June—but later conceded that some kind of council could advise the Fed and have a more complimentary role in bank oversight. Those previous talks—like so many other subjects—fell by the wayside as health-care reform took over the Senate's deliberations, but bits and pieces of those earlier negotiations are now resurfacing.

Still, as was the case in last summer's debate, the fine print with these new super-regulator talks needs to be ironed out, like whether the council would report to Congress and issue reports and whether it would draw on other agencies like the SEC. And speaking of the SEC, the new council is likely to have the backing of people like SEC chair Mary Schapiro and FDIC chair Sheila Bair, who backed the earlier proposal in July of last year. Perhaps they see this council as a chance for them to extend their jurisdiction and clout—so of course they're going to support it. Which raises the question: If what lawmakers fear is the fragmented, do-nothing approach to financial regulation, will creating a glorified committee made of a bunch of different regulators really make much of a difference?

Obama's HAMP Misery Continues

| Wed Feb. 17, 2010 1:51 PM PST

The Treasury Department released the latest figures today for its $75 billion flagship homeowner relief program, and the figures are—you guessed it—still abysmal. Through January the Home Affordable Modification Program has resulted in around 116,000 permanent modifications, 76,000 offers of permanent modifications, and more than 1 million homeowners beginning trial modifications.

Now, an interpretation. First off, the statistic that really matters here is that first number—116,000—the number of permanent mods. It's not much at all. By comparison, 2.8 million households got foreclosure notices in 2009, shattering the previous record and foretelling more pain in the housing sector in 2010. Now while HAMP wasn't created to address all kinds of foreclosures (which is arguably one of its flaws), a program with $75 billion in taxpayer funds behind it should do far more than help a meager 116,000 homeowners almost a year later.

Then there's that "trial modifications" figure. Trial modifications are only a few months in duration, are hardly a guarantee for a permanent modification, and do very little, if anything at all, to lessen the burden on beleagured homeowners. One homeowner, for instance, told me that after wrangling with her servicer, Saxon Mortgage Services, for months to get into HAMP, she finally got a modification; to her dismay, though, her new payments were a measly $40 less than her original, unaffordable mortgage. The reason why? Saxon claimed this homeowner had a sister who was giving her more than $1,000 a month and that skewed her income calculations. The rub: This homeowner was an only child.

It's these kinds of errors and general confusion that continue to plague HAMP, as these latest numbers show. As for the Treasury's take on HAMP's progress—"With nearly one million homeowners paying less each month and the number of permanent modifications steadily rising, HAMP is doing the job it was designed to do," says Phyllis Caldwell, head of the Treasury's Homeownership Preservation Office—that's just complete and utter spin. One million homeowners are not paying less each month—maybe for a short period, but even that's questionable—and HAMP is not doing its job by any stretch of the imagination. Far from it.

Life in Mortgageland Gets Bleaker

| Wed Feb. 17, 2010 8:47 AM PST

Despite yet more indications the economy is turning up—a slight drop in unemployment, increases in housing starts and manufacturing productivity—the view from Mortgageland remains bleak as ever. The percentage of mortgage delinquencies, or people 60 days or more late on their payments, increased in the 2009 fourth quarter for the 12th straight quarter. In 4Q 2009, almost 7 percent of borrowers were delinquent on their mortgages, an all-time national record. This delinquency statistic, seen as a precursor to foreclosure, was up from 6.25 percent the previous quarter and, more troublingly, up from 4.6 percent a year ago—a 50 percent jump from last year to now.

A few more interesting statistics from TransUnion, who released the data. The average national mortgage debt continued to increase, now at $193,690 up a hair from $193,121 in 3Q 2009 and from a year before $192,789. The place with the highest average mortgage debt: My very own District of Columbia, at a whopping $372,869 per person. This data, especially the ever-rising delinquency totals, further confirm (as if you needed more confirmation) that efforts at recovery in the housing industry—say, the Obama administration's $75 billion bust, the Home Affordable Modification Program—just aren't doing the job, as millions of people across the country are without jobs and stuck with homes for which they owe far more than their house is worth. The foreclosure crisis is an intractable problem, an ongoing headache, and right now there's little light at the end of the tunnel.

Ahmed Chalabi Strikes Again

| Wed Feb. 17, 2010 8:15 AM PST

Ahmed Chalabi, the conniving Shiite Iraqi politician who likely fed US officials bad intelligence before the Iraq war, is up to his old tricks yet again. Chalabi's latest controversy, the New York Times reported today, is one of two politicians blocking candidates in Iraq's upcoming parliamentary election with ties to Iran. The top US commander in Iraq, Gen. Ray Odierno, told the Times that Chalabi and Ali Faisal al-Lami, one of Chalabi's aides, are "clearly influenced by Iran" and that the US has "direct intelligence that tells us that." Odierno said Chalabi and al-Lami have had several meetings in Iran, including one with an Iranian on the US' terrorist watch list. The parliamentary blocking manuevers are an ongoing controversy in Iraq—the blockers say they're trying to purge candidates with former ties to Saddam Hussein, while blacklisted Sunnis say the block is sectarian-fueled and the result of outside pressure from countries like Iran. What's for certain is debacle's potential to undermine Iraq's elections next month.

For Chalabi, these allegations are merely latest twist in the long, strange journey of a brazen, amibitious, crooked man. From influential lobbyist and darling of Congress to arbiter of false intelligence and opportunist in the wake of Saddam's fall, no narrative of the Iraq war is complete without Chalabi, his manipulation of US leaders, and his illusions of grandeur as the new leader of a liberated Iraq—a vision, of course, that never came true. Now, in the latest act of a bad drama that won't end, Chalabi is allegedly doing the bidding of an increasingly dictatorial and militaristic country to undermine Iraq's early slivers of democracy and one of Obama's few foreign policy successes. He is, in short, the headache that just won't go away for American foreign-policy leaders.

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