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 Guardian, Men's Journal, the American Prospect, and, where he's an associate editor. Email him at akroll (at) motherjones (dot) com. He tweets at @AndyKroll.

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Obama's Wall Street Window Closes

| Tue Dec. 15, 2009 3:50 PM EST

This week the last of the big banks—Citigroup and Wells Fargo—announced they're repaying their TARP funds, ending a major chapter in the Great Bailout Era. (It's not the end of the Era entirely, as many banks still benefit from the Federal Reserve's guarantees and other means of support.) As the banks exit TARP, they proudly shed the bailout's stigma—namely, needing the federal government as a crutch—and are free from the scrutiny of compensation and governance that came with federal assistance. But from a financial-reform standpoint, the bailout represented a huge, once-in-a-lifetime opportunity for the Obama administration: They had leverage, huge amounts of it, Long-Term Capital Management-sized leverage over Wall Street and its "fat cats." Obama, Geithner, Summers, and their allies in Congress (i.e., Rep. Barney Frank (D-MA)) had a window in which they could enact rigorous, meaningful, lasting reforms in the way our financial markets and institutions do business.

Now's as good a time as ever to ask: How'd they do?

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Dispatch from Foreclosureland

| Mon Dec. 14, 2009 2:47 PM EST

In August, I wrote about the Obama administration's flawed $75 billion homeowner rescue effort, the Home Affordable Modification Program, and therein introduced readers to Florida homeowner Kristina Page. Page's mortgage company, Saxon Mortgage Services, first told her it hadn't heard of HAMP. Then, when Saxon finally admitted Page into the program, it lost her paperwork and told her multiple times to send more copies of the same information even though she knew the name of the employee who'd signed for the originals.

Page eventually made it into HAMP's trial period, a test run during which she had to make to three lower payments on time to qualify for the permanently lower, more affordable payments. After the test run, Page's mortgage company, per HAMP's guidelines, re-examined her financial information and recalculated what her permanent mortgage payments would be. Here's where, like so many other homeowners, Page ran into trouble. "As I feared," she recently wrote me, "the permanent payment is much higher than the trial period estimate payments." On the face of it, her new monthly payment will be $40 less—hardly much help when you consider the mess Page's been through to participate in HAMP.

It gets worse. Here's why, in Page's own words, Saxon gave her higher—and as it turns out, incorrectly calculated—HAMP payments:

I couldn't figure out how they had our income so high, so as I told you I contested the numbers. Saxon called this morning and I explained my problem. [The Saxon employee] checked into it and called me back with this gem. She said, "The extra income is because there is a letter in your file stating your sister Samantha will be contributing $1300 per month toward your household income"...I am an only child...I don't have a sister Samantha or any other sister. She [the employee] apologized profusely and even said, "This is all our fault"...I almost dropped the phone.

Music Monday: Morrissey Till I Die

| Mon Dec. 14, 2009 8:00 AM EST

The first thing you notice at a Morrissey concert isn't the man himself but his fans. Or at least that's how it felt at a recent show at Oakland, California's Paramount Theater, where Morrissey appeared in support of his latest album, a collection of B-sides titled Swords. Their hair styled circa The Smiths, clad in blue-jean rockabilly chic, Morrissey’s fans still adore him, deify him, cram at the foot of the stage and thrust their hands toward him for just a brush, a touch. Some gave Morrissey hand-painted signs; others clambered up onstage and dashed past security guards to wrap their arms around their beloved Moz.

And for at least one night, as he basked in the art deco majesty of the gorgeous Paramount, Morrissey was nothing if not grateful for the love. Notorious for cancelling shows (for reasons legit and not) and carrying an otherwise indifferent air about him, this was Morrissey at his most self-deprecating. "In view of cancellations, deaths, it's nice of you to hang around," he offered, later adding, "I can't believe you're still here."

A New Lease on Life for Detroit's Auto Dealers?

| Sat Dec. 12, 2009 7:00 AM EST

Update: The Senate passed the omnibus spending bill by a 57-35 vote on Sunday, with the dealer arbitration language intact. The National Automobile Dealers Association said in a statement, "The amendment will provide a fair process to address dealer concerns about the recent closures of General Motors and Chrysler dealerships, and will give affected dealers transparency and the right to arbitrate to regain their dealerships." Mark Reuss, GM's North American president, called the arbitration language "an opportunity for all of us to make the right decisions and move on."

Buried way down in the fine print of the Congress' $1.1 trillion spending bill, passed Thursday by the House, is a lifeline for an endangered species—the American car dealer. A clause inside the the 1,088-page bill would give thousands of General Motors and Chrysler dealerships that have been put on the chopping block the chance to challenge their closure though arbitration. The measure's supporters say it will put the brakes on the Obama administration's controversial attempt to resuscitate Detroit by downsizing its dealerships. "Profitable dealers should have never been terminated in the first place, and I was proud to join the fight to have these short-sighted decisions reversed," said Rep. Chris Van Hollen (D-MD) in a statement last week. "Automobile manufacturers won't be able to get back on their feet without a strong dealer network, and Congress is committed to ensuring that such a network exists."

The dealer-arbitration plan is the latest lurch in the push-and-pull between GM, Chrysler, and their dealers, which began earlier this year when the two automakers emerged from bankruptcy proceedings with plans to shutter more than 2,000 auto showrooms nationwide. Backed by the Obama administration's Auto Task Force, the companies' executives told Congress that cutting unprofitable or underperforming dealers would trim unnecessary dealers, cut costs, and make their firms more competitive with their domestic and foreign counterparts. Fritz Henderson, the then-president and CEO of GM, said dealer closures could save his company more than $2 billion. Michael J. Robinson, a GM vice president and general counsel, told a House subcommittee in July that the move would allow the surviving dealers "to improve the overall customer experience and retain current customers."

However, car salespeople and their allies argue that closing dealerships would have the opposite effect, driving away consumers and possibly even killing the automakers. "When you hear [new GM CEO Ed] Whitacre say, 'Well, we're going to increase market share,' and you don't have as many dealers, you wonder what he's been drinking or smoking," says David Cole, chairman of the Center for Automotive Research in Ann Arbor, Michigan. "It just doesn't compute."

Harry Reid's Medicare Mess

| Fri Dec. 11, 2009 4:36 PM EST

In lieu of a public option for health-care reform, Senate Majority Leader Harry Reid announced a tentative, still-nebulous compromise this week that allows people 55 to 64 to "buy in" to Medicare starting in 2011. According to the Kaiser Family Foundation, the buy-in could affect 4 million people without health insurance. And while Reid's plan, concocted with five Democratic and five centrist senators dubbed the "Gang of 10," has been assailed as a major step toward single-payer care (and—gasp!—socialism), other critics do in fact raise raise some serious issues on how Reid's plan completely misses the mark.

First, Medicare is hardly well-suited to absorb additional users. As the Medicare Payment Advisory Commission (Medpac) told Congress (PDF) in June, Medicare's financial breaking point is fast approaching, not to mention that 60 percent of people on Medicare now pay for supplemental coverage because of cost-sharing caps. Add to that mess three or four million 55 to 64-year-olds who're likely to need much more care than thirty- or even fortysomethings, and you're looking at a potentially serious viability crisis for Medicare.

The other big unknown with expanding Medicare is whether the health-care system in place—in particular, the physician workforce in place right now—can handle them. To illustrate, I turn to a subject more familiar than the annals of Medicare: the iPhone. When the iPhone arrived in stores (i.e., when people get access to health insurance), millions rushed to the nearest retailer and waited in long lines to buy one. However, when that huge crowd of people then turned on their phones and connected AT&T's network (i.e., newly insured people going to their doctors and receiving care), they overloaded a vastly underprepared system. The result: dropped calls, spotty service, slow loading times, and seething techies. In other words, the infrastructure buckled under the weight of all those new users.

Much the same could happen to Medicare which, like all American health care, lacks the capacity to handle a massive influx of new people. Dr. Ted Epperly, president of the American Association of Family Physicians, told me, "If all of a sudden President Obama increases access to the uninsured, there will be a huge capacity that the demand will not be met for. People will have access issues, and they will be sicker"; and though he was referring to health care in general, his quote equally applies to Medicare. As American Medical Association president J. James Rohack said in a statement this week: "Currently, the flawed Medicare physician payment formula will cause a drastic 21 percent cut to physicians caring for Medicare patients in January, and 28 percent of Medicare patients looking for a new primary care physician are having trouble finding one." Rohack added that the AMA doesn't favor Reid's plan because the group "has longstanding policy opposing the expansion of Medicare given the fiscal projections for the future," and instead prefers a health insurance exchange plan.

Perhaps most telling was this statement by Mayo Clinic executive director Jeffrey Korsmo (read by Sen. Lamar Alexander (R-TN)) earlier this week:

"Expanding the Medicare system to persons 55-64 years old would ultimately hurt patients by accelerating the financial ruin of hospitals and doctors across the country. Mayo Clinic alone has begun to limit the number of Medicare patients and their practices, and the growing number of other providers will. This is clearly an unsustainable model."

Coming from one of the most highly regarded health-care institutions in the nation, it makes you wonder whether Reid's policy has less to do with healthy Americans and more to do with politically palatable solutions.

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