Obama laid out a broad plan to create new jobs and train American workers: Obama said he will push initiatives to help manufacturers bring jobs back to America, and "continue to focus on strategies to create good jobs in wind, solar, and natural gas that are lowering energy costs and dangerous carbon pollution."
The president also emphasized the importance of education and job training in bolstering the American workforce. He said he would continue to push for universal preschool, and added that "federal agencies are moving on my plan to connect 99 percent of America’s students to high-speed internet over the next five years." He also reminded the audience that Congress is closing in on a plan to lower student loan interest rates.
The president will circumvent Congress if he has to: In the face of an obstinate Congress, Obama said that he would reach out to the American people in speeches over the coming weeks to win them over to his side and get them to pressure their representatives. "Over the next several weeks, in towns across this country, I will engage the American people in this debate," he promised. Obama vowed to use his own executive authority, too, to push the economy forward, and said he'd also "pick up the phone and call CEOs, and philanthropists, and college presidents—anybody who can help—and enlist them in our efforts."
The Sunlight Foundation reviewed three years worth of meetings that banks, industry lobbyists, corporations, and financial reform advocacy groups had with the Commodities Futures Trading Commission (CFTC), the Treasury Department and the Federal Reserve, and found that these regulators had met 2,118 times with financial institutions, and only 153 time with pro-reform groups. Here's what that looks like, via the Sunlight Foundation:
And here is how those meetings break down by agency:
Goldman Sachs, the top meeting-goer, had 222 consultations with regulators over the past three years. JPMorgan Chase met with the agencies 207 times, and Morgan Stanley 175 times. The topics at those meetings were most likely to be derivatives (financial products with values derived from from underlying variables, like crop prices or interest rates), which Dodd-Frank brought under regulation for the first time, and the Volcker rule portion of the law, which would limit risky trading by banks.
From the Foundation's report:
Regardless of how we cut the data, the same striking pattern holds: financial institutions, especially the big banks, are dogged and ubiquitous. Pro-reform groups are stretched thin. Lawyers and lobbyists are also active participants, primarily representing the banks. A number of other corporations show up frequently, most commonly in the energy and agro-business sectors, where derivatives and other market hedges are common practice.
Because of the barrage of industry lobbying, "Regulators themselves have become overly concerned about finalizing rules," CFTC commissioner Bart Chilton told Yahoo News recently. "Over-analysis paralysis, fears of litigation risks, and the lack of people-power have all contributed to the slowdown."
The GOP has several weapons in its arsenal, including a case against the agency that the Supreme Court will hear in the fall, a separate suit recently lodged against the bureau, several pieces of legislation that would weaken the CFPB, and a slew of bills that would clamp down on government regulators more generally. There's just one problem: The plans are probably not going to work.
Six months after former SEC chief enforcement officer Robert Khuzami left his post at the agency, he took a job—which pays more than $5 million a year—doing white-collar defense at Kirkland & Ellis, one of the country's biggest corporate law firms. There, he will represent the same corporations that his former agency oversees, handling cases in which firms have violated SEC rules. (Khuzami will face a one-year waiting period during which he is now allowed to have contact with the SEC, and he is permanently banned from appearing before the agency in a case in which he was previously involved.)
This kind of cross-over, financial reformers say, undermines the ability of the SEC to do its job properly. Via the Times:
The revolving door at firms like Kirkland has alarmed some watchdog groups. The Project on Government Oversight, a nonprofit group, released a study this year highlighting a pattern of former SEC officials securing favorable results from the agency.
"It can really help a Wall Street bank to show they’re represented by the former top cop on Wall Street," said Michael Smallberg, an investigator at the group. "It’s not like you see an equal number of SEC lawyers going to represent shareholders and whistle-blowers."
As provisions of the 2010 Dodd Frank financial reform act finally begin to go into effect, and banking regulators warn of a new wave of crackdowns on bad behavior on the Street, Washington insiders are becoming even more desirable for firms whose job it is to save the financial industry's hide. "You want a big name you can trot out before corporate boards," Peter Zeughauser, a consultant to big financial firms, told the Times.
Khuzami was hired to the SEC after the financial crisis and was charged with ramping up its enforcement unit. He creating new ways of tracking previously unregulated corners of Wall Street, according to the Times, and initiated a record number of actions, including lawsuits and civil penalties, against big banks.
So what's with Khuzami's change of heart? He argues that white-collar defense work is critical to a functioning justice system. "It’s both aggressive enforcement and vigorous defense that are critical to justice and fairness," Khuzami told the Times.
He added that he'll be good at the job because anyone required to police Wall Street has to know how it works.
Income inequality in America is has spiked in the past three decades, and has only worsened since the recession. But that's not the only factor contributing to the deepening divide between the rich and poor. Recent research has shown that Americans enjoy less social mobility than people in other industrialized countries—in other words, American kids are less likely than foreign kids to grow up to make more money than their parents. A new study by a team of economists at Harvard and University of California–Berkeley provides the most detailed look yet at patterns of upward mobility in the US, shedding light on why it's not so easy to pull yourself up by your bootstraps in the US of A.
The study's findings, which were first reported in the New York Times on Monday, are based on millions of earnings records. Researchers found that children born into the poorest 20 percent of households are least likely to end up in the top 20 percent of income earners (more than $70,000 by age 30) in the Southeast and the industrial Midwest. Upward mobility is particularly lacking in Memphis, Indianapolis, Atlanta, and Columbus. Poor children are most likely to be able to work their way to an upper-income life in the Northeast, Great Plains and the West, including in cites such as New York, Boston, Salt Lake City, Pittsburgh, and Seattle. Here's what that looks like, via the Times:
The researchers were surprised that what most contributed to social mobility wasn't heftier tax breaks for the poor or a stronger safety net. The difference between high-mobility and low-mobility communities has more to do with early education, family structure, and the physical geography of metropolitan areas. The Times explains:
The researchers concluded that larger tax credits for the poor and higher taxes on the affluent seemed to improve income mobility only slightly. The economists also found only modest or no correlation between mobility and the number of local colleges and their tuition rates or between mobility and the amount of extreme wealth in a region.
But the researchers identified four broad factors that appeared to affect income mobility, including the size and dispersion of the local middle class. All else being equal, upward mobility tended to be higher in metropolitan areas where poor families were more dispersed among mixed-income neighborhoods.
Income mobility was also higher in areas with more two-parent households, better elementary schools and high schools, and more civic engagement, including membership in religious and community groups.
Regions with larger black populations had lower upward-mobility rates. But the researchers’ analysis suggested that this was not primarily because of their race. Both white and black residents of Atlanta have low upward mobility, for instance.
The comparison of metropolitan areas allows researchers to consider local factors that previous mobility studies could not—including a region’s geography. And in Atlanta, the most common lament seems to be precisely that concentrated poverty, extensive traffic and a weak public-transit system make it difficult to get to the job opportunities. "When poor communities are segregated," said Cindia Cameron, an organizer for 9 to 5, a women’s rights group, "everything about life is harder."
Although location has a lot to do with whether poor kids in Indianapolis or Montgomery will be able to live better than their parents, for rich kids, geography doesn't really matter. The study found that the chance rich kids will grow up to be rich is pretty much the same across metropolitan areas around the country. Of kids who grew up one-percenters, for example, one out of three will be making at least $100,000 by the time they turn 30.