Erika Eichelberger

Erika Eichelberger

Reporter

Erika Eichelberger is a reporter in Mother Jones' Washington bureau. She has also written for The NationThe Brooklyn Rail, and TomDispatch. Email her at eeichelberger [at] motherjones [dot] com. 

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4 Takeaways From Obama's Big Speech on the Economy

| Wed Jul. 24, 2013 2:24 PM EDT

President Barack Obama delivered a major address Wednesday at Knox College in Galesburg, Illinois, in which he laid out a wide-ranging plan to get the still struggling American economy raring again, and called on Republicans to drop their obstructionism and play along. Here are four takeaways from the speech:

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."

Charts: Here Is How Banks Get What They Want

| Wed Jul. 24, 2013 11:31 AM EDT

The Dodd-Frank financial reform act of 2010 turns three years old this month. But because of intense Wall Street lobbying, only about a third of the provisions it requires have actually been made into rules by Wall Street regulators, and many have gaping loopholes designed by industry lobbyists. A new analysis by the Sunlight Foundation, a non-profit that advocates for government transparency, starkly illustrates why regulatory agencies are so swayed by industry: over the past three years, those whose job it is to police Wall Street have met with big banks 14 times more often than pro-reform groups to discuss proposed Dodd-Frank rules. 

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."

Strong-arming regulators behind the scenes is just one tactic Wall Street uses to get its way. Litigation, and new legislation to gut the 2010 financial reform law play a part too. As a result, Chilton says, "Much of Dodd-Frank is dying on the vine."

Wall Street Cop Crosses Over to the Dark Side

| Tue Jul. 23, 2013 11:51 AM EDT

In recent months, as Wall Street regulators and Congress debated how best to police American banks operating overseas, the Securities and Exchange Commission (SEC) came under fire from financial reform advocates for the comparatively weak regulations it proposed. Financial reform advocates could have predicted this; when the agency's new chief Mary Jo White was confirmed in April, reformers warned she would be soft on Wall Street because she used to work defending some of the biggest stars in the financial industry. But a story in the New York Times Tuesday about a former SEC regulator who recently joined the dark side as a Wall Street defense lawyer, illustrates that the problem of murky boundaries between Wall Street and its overseers runs much deeper.

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.

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