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 |

Firing Back in Wall St.'s Reform War

| Thu Feb. 25, 2010 11:07 AM EST

Americans for Financial Reform, a leading advocacy group lobbying for major regulatory crackdowns on Wall Street, released a new ad today coming to the defense of Sen. Jon Tester (D-MT), who's been under fire lately for his support for an independent Consumer Financial Protection Agency and for generally backing greater reforms of the financial markets. In particular, Tester's been taking a lot of heat from a secretive, deep-pocketed organization called the Committee for Truth in Politics, which has targeted Tester and called the financial reform supported by the Montana senator a $4 trillion bank bailout in disguise. (That language, you'll remember, comes from a memo circulated by consultant Frank Luntz trying to torpedo Wall Street reforms.) Earlier this month, Tester called the committee's attacks on him "flat-out false," and asking to see the source of the committee's funding, which it doesn't publicize. "Our economy almost collapsed a year and a half ago because there were no referees on Wall Street," Tester wrote in a statement. "Montana's Main Street small business owners and families should never have to pay the price of greed on Wall Street."

Here's the ad:

Advertise on MotherJones.com

8 Health Lobbyists Per Lawmaker

| Wed Feb. 24, 2010 6:05 PM EST

In 2009, the hordes of lobbyists on Capitol Hill trying to influence the course of health-care reform grew to more than 4,500, representing 1,750 different organizations and companies—from the AARP and US Chamber of Commerce to religious groups and the Business Roundtable, according to a new analysis by the Center for Public Integrity (CPI). Here's a better way of visualizing that lobbying total: For each member of Congress, there are now eight lobbyists involved in health-care reform, up from about six lobbyists per lawmaker as was reported last fall when talks had practically paralyzed Congress. 

As CPI's new data makes clear, just about everyone and their uncle has signed up to lobby on health-care negotiations, which are now entering their final act. Among the top groups deploying their influence-peddlers to Washington are advocacy organizations, like the Chamber and Business Roundtable, as well as hospitals, insurers, and manufacturing companies also sending numerous representatives to lobby House and Senate lawmakers. All told, CPI's new report just goes to show that when huge amounts of money are at stake, powerful special interests like the pharmaceutical and insurance industries are willing to bombarding politicians in order to ensure none of their profits slip away.

Below you'll find an interactive graph, courtesy of CPI, letting you dig into their data a bit more.

Obama: Markets No Better than Pre-Crisis

| Wed Feb. 24, 2010 3:49 PM EST

In a speech today to the powerful coalition the Business Roundtable, President Obama tried to rally some of the biggest players in the US economy around his plans to re-regulate the financial system—a system, he warned, "with the same vulnerabilities that it had before this crisis began." Obama was speaking to the Business Roundtable at their quarterly meeting in Washington, and set aside a few minutes in his speech—which ranged from job creation to international trade to health care—to emphasize the need for reining in Wall Street and preventing the kinds of reckless risk-taking and outright gambling that fueled the subprime meltdown and the Great Recession. "If we don't pass financial reform," he said, "we can expect more crises in the future of the sort that we just saw."

Here's more from his speech calling on the need for greater—and smarter—financial reform:

[A]s I said in the State of the Union, my goal is not to punish Wall Street. I believe that most individuals in the financial sector are looking to make money in an honest and transparent way. But if there aren't rules in place to guard against the recklessness of a few, and they're allowed to exploit consumers and take on excessive risk, it starts a race to the bottom that results in all of us losing.

And that's what we need to change. We can't repeat the mistakes of the past. We can't allow another AIG or another Lehman to happen again. We can't allow financial institutions, including those that take your deposits, to make gambles that threaten the whole economy. What does that mean? It means we've got to ensure consolidated supervision of all institutions that could pose a risk to the system. It means we have to close loopholes that allow financial firms to evade oversight and circumvent rules of the road. It means that we need more robust consumer and investor protections.

And I ask the Business Roundtable to support these efforts. There are lobbyists on the Hill right now trying to kill reform by claiming that it would undermine businesses outside of the financial sector. That is not true. This is about putting in place rules that encourage drive and innovation instead of shortcuts and abuse. And those are rules that will benefit everybody.

Advocate: Rein in CEOs!

| Wed Feb. 24, 2010 11:33 AM EST

The pro-financial reform organization Americans for Financial Reform (AFR) today sent a letter [PDF] to the Senate banking committee, who's leading financial-reform talks right now and is expected to release a bill next week, to make sure it includes new oversights and protections of corporate boards—the very leaders, AFR says, who blindly let financial markets implode under their watch:

"Institutional investors have recognized that risk management oversight failures by the boards of Wall Street banks were a central factor in the financial collapse. Moreover, it is well documented that the executive compensation plans prevalent on Wall Street, in which the vast majority of pay comes through stock options and bonuses based on short-term performance, ensured that bank executives reaped huge gains while the housing bubble grew, but suffered none of the downside when their over-leveraged bets and gambles on complex derivatives went sour."

In a November financial-reform discussion draft in the Senate [PDF], a number of investor protections and executive-compensation crackdowns were included, like giving shareholders a "say on pay" and requiring a majority vote for uncontested director elections, among others. Right now, though, it's unclear whether those reforms from last fall will make it into the draft being crafted by Sen. Chris Dodd (D-CT), the committee's chairman, Sen. Richard Shelby (R-AL), the ranking member, and Sen. Bob Corker (R-TN), who joined Dodd after Shelby briefly dropped out of the talks earlier this month.

AFR's letter is intended as well a counterbalance to recent lobbying efforts, most visibly those by the US Chamber of Commerce, to oppose corporate-governance reform. For instance, Chamber CEO Tom Donahue said in January that the "mad scientists" who created tricky financial instruments (read: synthetic collateralized debt obligations, derivatives, option adjustable-rate mortgages) deserved the high salaries and bonuses they've earned in the past. However, AFR goes after Donahue in today's letter, citing his past leadership roles in maligned companies like Qwest and Sunrise Senior Living, and says his checkered record in corporate governance should cast serious doubt on any of his reform suggestions. "The US Chamber under Mr. Donohue is uniquely unqualified to speak credibly on what corporate governance structures are necessary to protect shareholder wealth," the letter concludes.

"Underwater" Crisis Grows

| Wed Feb. 24, 2010 10:11 AM EST

"Underwater": that's a watchword you've probably heard plenty throughout the Great Recession and the still dismal housing crisis. It's people who owe more than than their house in worth, and who essentially have few economic reasons (setting aside their own beliefs and fears) to stay underwater when they could rent more cheaply in a comparable, and sometimes better, home. Well, in a sign that the housing crisis remains bleak, the number of people underwater continues to increase, up to 11.3 million by the close of 2009 compared to 10.7 in 2009's third quarter, according to data from analyst FirstAmerican Core Logic. Another 2.3 million, the analysis says, are approaching negative equity but aren't underwater yet. Nationwide, homeowners are a whopping $800 billion underwater.

The details are even more troubling in states hit hardest by the subprime meltdown. In Nevada, for instance, 70 percent of all mortgage properties are underwater; elsewhere, 51 percent are in Arizona, 48 percent in Florida, 39 percent in Michigan, and 35 percent in California. That so many millions of homeowners are underwater reverberates throughout the economy as well: As real estate expert Brent White of the University of Arizona points out in a recent paper, underwater homes result in decreased consumer spending, the lifeblood of the American economy; and decreased household mobility, which can lead to higher unemployment and less productivity. It's a multi-pronged attack on our economy, dragging down not just the housing market but leading to people buying less and working less.

To blame for this pandemic of underwater homes are lenders, mortgage servicers, the government, and—yes—homeowners. Lenders and mortgage servicers, as myself and others have written, are generally loath to write down principal amounts on a homeowner's loan in, say, a modification setting—they don't want to take the losses, preferring to lower interest rates or extend the loan's term. The government, too, has utterly failed to tackle the negative-equity problem: It's flagship homeowner rescue, the taxpayer-funded Home Affordable Modification Program, doesn't force mortgage servicers to reduce principal balances, which is at the heart of our housing dilemma, and offers cursory, modest solutions; the program also has a ceiling on how far underwater you can be to qualify—125 percent underwater—and if you're in even worse shape than that, well, too bad.

And finally, homeowner are to blame for at least two reasons. First, because they purchased their home, as many did, during the housing bubble when prices were grossly inflated, the only direction their home's value could go was down; the odds were high they'd be underwater to some degree. And second, a lot of homeowners, as White highlights in his paper, remain in their underwater homes when the smartest thing to do—economically, at least—is strategically default, walk away, and start anew. For many of those 11.3 million underwater homeowners, walking away makes perfect sense, you can rent for cheaper, and you can take that extra money from your previous mortgage payment and invest or save it. "The real mystery," White writes, "is not—as media coverage has suggested—why large numbers of homeowners have been walking away, but why, given the percentage of underwater mortgages, more homeowners have not been."

Tue Jun. 24, 2014 3:22 PM EDT
Thu Apr. 24, 2014 6:06 AM EDT
Mon Jan. 13, 2014 1:19 PM EST
Mon Dec. 16, 2013 10:47 AM EST
Fri Oct. 18, 2013 12:12 PM EDT