2010 - %3, February

The Real Case for Broken Government

| Sun Feb. 28, 2010 9:17 PM PST

Over at MoJoBlog, Andy Kroll declares that "Sen. Chris Dodd (D-CT) has dealt the death blow to consumer protection." He's talking about the Consumer Finance Protection Agency, a proposed federal agency that would (in Elizabeth Warren's words) regulate financial products the same way we regulate toasters. Republicans have been opposed from the start to a CFPA with teeth, and Dodd has finally given in. Here's the PowerPoint version of his latest proposal:

  • Instead of being an independent agency, the CFPA has morphed into a Bureau of Financial Protection within the Treasury Department.
  • The BFP would regulate large banks and mortgage companies. However, it would have no authority over banks with assets of less than $10 billion and it would have no authority over other non-bank financial institutions. (The BFP can petition for authority over other financial sectors, but this is almost certainly a fig leaf. It would never get it.)
  • States that want to enforce higher consumer standards for financial products wouldn't be allowed to. The BFP preempts all state regulation.
  • The BFP would have to confer with existing bank regulators before making any new rules, and its rules could be overriden by the Systemic Risk Council.

I don't have a good sense of how much Dodd is to blame for this toothless state of affairs. After all, Republicans instantly rejected even this watered-down proposal, objecting to the "rule-writing power Dodd proposed for the consumer division." But if they're objecting to rule-writing power, then they're simply objecting to anything that might have even the slightest chance of being effective. It's all kabuki.

This, far more than healthcare reform, is the most disturbing evidence of America's broken politics. After all, healthcare was always bound to be brutally partisan. Democrats and Republicans have been disagreeing about national healthcare for decades and there was no reason to think it would be different in 2009. We liberals may not like the result so far, but it was hardly unexpected.

But financial reform is different. Sure, Republicans are generally less enthusiastic about corporate regulation than Democrats. This was never going to be a chorus of Kumbaya. But Republicans aren't philosophically opposed to preventing economic meltdowns, and if there's anything that should have inspired even conservatives into agreeing that Wall Street needed to be reined in a wee bit, it was the reckless financial excesses of the aughts and the unprecedented economic devastation it provoked. The entire country is suffering through a grueling economic downturn that's the worst since the Great Depression, the collapse of 2008 makes the case for regulation almost irresistable, and even the GOP's tea party base is ready to lynch bankers on sight. The political case for regulation could hardly be more powerful.

But that hasn't made a lick of difference. Not a lick. On an issue where the facts on the ground were so compelling that Democrats and Republicans should have been easily able to forge a consensus for serious change despite philosophical differences, there's been barely even a recognition from conservatives that anything went wrong. It's as if Democrats had responded to 9/11 by flatly opposing any action whatsoever to beef up our anti-terrorist capabilities.

So what now? Unlike healthcare, where a weak bill is still worth passing because it might lead to stronger reforms in the future, I don't think you can say that about this. An agency with no rulemaking authority isn't going to suddenly gain some later on. It will just be one of those indestructible bureaucratic barnacles, taking up space in some federal office building forever without ever accomplishing anything.

Writing a decent bill and making Republicans kill it might provide Democrats with some kind of partisan advantage. Maybe. But passing Dodd's current proposal, let alone something even weaker, would certainly have no substantive effect, either now or in the future. There's literally no point in bothering to bring it to the floor. After going through the greatest financial catastrophe of our lifetimes, brought on by forces we understand perfectly well, we're going to do nothing to keep it from happening again. That's a broken government.

UPDATE: Paul Krugman writes essentially the same thing here. At this point, no bill might be better than what it's possible to pass in the face of Republican opposition.

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LA-SF Reality Check

| Sat Feb. 27, 2010 11:57 PM PST

Well, that didn't take long:

Despite a new $2.25-billion infusion of federal economic stimulus funding, there are intensifying concerns — even among some high-speed rail supporters — that California's proposed bullet train may not deliver on the financial and ridership promises made to win voter backing in 2008.

....New inflation-adjusted construction figures show that outlays needed to build the first 520-mile phase of the system have climbed more than 25%, from $33.6 billion to $42.6 billion....Under the new scenario, one-way fares between L.A. and San Francisco rise from $55 to $105, closer to the cost of an airline ticket. The change shows healthier surplus revenue, which may appeal to private investors. But estimated ridership falls by about one-third, to about 40 million annual boarders in 2030.

So in a mere two years, projected ticket prices have gone up 90%, ridership has gone down 30%,1 and construction costs have increased 25%. There's nothing yet about increasing the projected travel time from its original, very optimistic, 2.5 hours, but I'm sure that's coming too. Who could have predicted?

1Actually, my recollection is that the original studies were based on a fantasy ridership of 100 million. So ridership projections are actually down 60%.

Corn on Countdown: Bunning's Hall of Shame

Sat Feb. 27, 2010 9:57 PM PST

David Corn joined guest host Lawrence O'Donnell on MSNBC's Countdown with Keith Olbermann to discuss the latest obstructionist tactics of Kentucky Sen. Jim Bunning.

Dodd's Consumer Financial Protection Plan

| Sat Feb. 27, 2010 8:45 PM PST

Mother Jones has obtained a copy of Sen. Chris Dodd's plan to house a consumer financial protection office within the Department of the Treasury rather than creating an independent agency. Several other news sources have received copies, but none have made the leaked document publicly available. We're posting Chris Dodd's consumer financial protection plan here (PDF). It seems certain to disappoint experts and progressives who had called for a powerful new agency. (Andy Kroll has more on this.) This is the document's top-line summary:

Create a [Bureau of Financial Protection] inside of Treasury with a Presidentially-appointed director; a dedicated budget (through assessments on large banks, non-banks, and with the Fed making up the shortfall); autonomous rule-writing authority with the regulations to apply across-the-board to all entities offering financial services or products; and examination and enforcement authority for large banks and mortgage companies, small banks in a back-up capacity, and other non-banks on a risk basis, as described below.

The independent agency proposal would be dropped.

As Andy explained Saturday afternoon, Dodd's decision to move financial protection inside an existing agency is an effort to gain Republican votes for financial reform. But it's unclear whether either of the Republicans Dodd has negotiated with to date—Sen. Richard Shelby (R-Al.) and Sen. Bob Corker (R-Tenn.)—will support the new plan. There hasn't been any hint of GOP backing for the proposal in newspaper articles on Dodd's leaked plan.

Even if Dodd can convince Republicans to back the notion of a Treasury-based consumer protection office, this proposal could have problems passing the House. Multiple members of the House Financial Services Committee, including its chair, Rep. Barney Frank (D-Mass.), told Andy last week that they were worried about the Senate watering down consumer protection. (Frank said that if the Senate's financial reform plan did not include a standalone agency, it would be a potential "dealbreaker.") Now House Dems' worst fears are already being realized—and as far as anyone knows, Dodd hasn't even won any Republican votes.

Dodd Guts Consumer Protection

| Sat Feb. 27, 2010 4:19 PM PST

UPDATE: Mother Jones has obtained a copy of Dodd's consumer financial protection plan.

Sen. Chris Dodd (D-CT) has dealt the death blow to consumer protection. The silver-haired senator, who chairs the Senate banking committee, plans to announce this week the creation of a Bureau of Financial Protection inside the Treasury—not unlike the Food and Drug Administration’s placement with the Health and Human Services Department—instead of an independent, standalone Consumer Financial Protection Agency, according to a leaked document obtained by the New York Times. The fate of consumer protection has been a chronic migraine for Dodd; his initial Republican co-negotiator, Sen. Richard Shelby (R-AL), abandoned talks with Dodd over a dispute on the CFPA, and Dodd’s current dance partner, Sen. Bob Corker (R-TN), called an independent consumer agency a “non-starter.” If Dodd does indeed gut the CFPA, the decision sets the stage for a showdown with the Obama administration and the House, both of whom want the CFPA, and in particular Rep. Barney Frank (D-MA), who told Mother Jones the agency was a “dealbreaker” for him.

According to the leaked proposal, the president would appoint the Bureau of Financial Protection’s director and its responsibilities would include overseeing big banks as well as non-banks, like the subprime lenders who peddled millions of explosive mortgages and preyed on unwitting consumers. The agency, the Times reports, would also have the authority to implement new financial regulations, but would handle rule-making a lot like the SEC does now:

The Dodd proposal would require the bureau to consult with other regulators before issuing rules and to make public any objections raised by those regulators, along with an explanation of how the bureau addressed the concerns. Those regulators also could appeal the proposed rule to a new interagency council tasked with detecting systemic risks.

The proposal would exempt banks and credit unions with assets of $10 billion or less. It would give the bureau the power to enforce regulations on large banks and nonbank lenders, in conjunction with other regulators, but would largely have to defer to other regulators in the case of smaller banks.

Dodd’s decision to go with a Treasury-housed consumer-protection agency instead of an independent agency—which he claimed to have supported earlier this month—is undoubtedly a move to garner bipartisan support for financial reform in the Senate. The senior senator has stated on numerous occasions that he wants to pass a major financial-reform bill before he retires this fall, and ditching a tough, standalone Consumer Financial Protection Agency for a more bureaucratic solution is one way to win some Republican support, even though Dodd himself said last fall that "There needs to be an independent agency that looks out for people when they take out a loan, open a checking account or use a credit card."

Inside a Wall Street-inclined Treasury Department—the previous secretary was a former Goldman Sachs CEO; Geithner, while not a banking alum, relies on Wall Street’s advice more than anyone else; and plenty of other current staffers are former Big Finance types—it’s unclear whether consumer protection would actually be a priority or not. Elizabeth Warren, who initially concocted the idea of a CFPA and is a leading consumer advocate in Washington, certainly won’t be pleased with Dodd’s new plan, just as most consumer advocates lobbying for greater crackdowns on predatory practices will be left disappointed.

If there is a winner emerging from Dodd's new consumer plan, it's the lobbyists who lobbied to kill the CPFA. Chief among them is the US Chamber of Commerce, who went so far as to create an entire website, StoptheCFPA.com, to ensure the independent agency met its demise. Now, as Dodd and the banking committee roll out their bill this week, it looks like the lobbying onslaught by the Chamber and its allies paid off.

Daniel Ellsberg on the Limits of Knowledge

| Sat Feb. 27, 2010 2:55 PM PST

Jay Ackroyd went to a conference last week where he heard Daniel Ellsberg speak. He apparently recounted one of my favorite Ellsberg stories, and since it's one of my favorites I'm going to repeat it in full below. It's from Ellsberg's book Secrets, and the setting is a meeting with Henry Kissinger in late 1968 when he was advising him about the Vietnam War. The idea of Kissinger seeking out Ellsberg for advice on Vietnam initially seems a bit unlikely, but in 1968 Ellsberg was a highly respected analyst on the war who had worked for both the Pentagon and Rand, and Kissinger was just entering the government for the first time. Here's what Ellsberg told him. Enjoy:

"Henry, there's something I would like to tell you, for what it's worth, something I wish I had been told years ago. You've been a consultant for a long time, and you've dealt a great deal with top secret information. But you're about to receive a whole slew of special clearances, maybe fifteen or twenty of them, that are higher than top secret.

"I've had a number of these myself, and I've known other people who have just acquired them, and I have a pretty good sense of what the effects of receiving these clearances are on a person who didn't previously know they even existed. And the effects of reading the information that they will make available to you.

"First, you'll be exhilarated by some of this new information, and by having it all — so much! incredible! — suddenly available to you. But second, almost as fast, you will feel like a fool for having studied, written, talked about these subjects, criticized and analyzed decisions made by presidents for years without having known of the existence of all this information, which presidents and others had and you didn't, and which must have influenced their decisions in ways you couldn't even guess. In particular, you'll feel foolish for having literally rubbed shoulders for over a decade with some officials and consultants who did have access to all this information you didn't know about and didn't know they had, and you'll be stunned that they kept that secret from you so well.

"You will feel like a fool, and that will last for about two weeks. Then, after you've started reading all this daily intelligence input and become used to using what amounts to whole libraries of hidden information, which is much more closely held than mere top secret data, you will forget there ever was a time when you didn't have it, and you'll be aware only of the fact that you have it now and most others don't....and that all those other people are fools.

"Over a longer period of time — not too long, but a matter of two or three years — you'll eventually become aware of the limitations of this information. There is a great deal that it doesn't tell you, it's often inaccurate, and it can lead you astray just as much as the New York Times can. But that takes a while to learn.

"In the meantime it will have become very hard for you to learn from anybody who doesn't have these clearances. Because you'll be thinking as you listen to them: 'What would this man be telling me if he knew what I know? Would he be giving me the same advice, or would it totally change his predictions and recommendations?' And that mental exercise is so torturous that after a while you give it up and just stop listening. I've seen this with my superiors, my colleagues....and with myself.

"You will deal with a person who doesn't have those clearances only from the point of view of what you want him to believe and what impression you want him to go away with, since you'll have to lie carefully to him about what you know. In effect, you will have to manipulate him. You'll give up trying to assess what he has to say. The danger is, you'll become something like a moron. You'll become incapable of learning from most people in the world, no matter how much experience they may have in their particular areas that may be much greater than yours."

....Kissinger hadn't interrupted this long warning. As I've said, he could be a good listener, and he listened soberly. He seemed to understand that it was heartfelt, and he didn't take it as patronizing, as I'd feared. But I knew it was too soon for him to appreciate fully what I was saying. He didn't have the clearances yet.

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GOP to the Unemployed: Drop Dead (You Bums)

| Sat Feb. 27, 2010 12:17 PM PST

As of Sunday, unemployment benefits will officially end for hundreds of thousands of Americans, thanks to maneuverings by Senate Republicans to prevent a vote that would have extended those benefits. Unless the extension is passed soon, some 1.1 million of the nation’s unemployed will see their unemployment benefits expire in the coming month, and 5 million will lose benefits by June.

The House finally voted to extend benefits on Thursday, after several days of stalling and posturing. But in the Senate, the measure was blocked by Kentucky’s Jim Bunning. Politico reported that late into Thursday night, Bunning held out against repeated Democratic attempts to pass the extension by unanimous consent. In response to entreaties from colleagues across the aisle, other Republican senators rose to defend Bunning's right to obstruct the vote, and Bunning himself was heard to utter, “Tough shit.”  

Bunning said he wanted to see the cost of the benefits offset by other savings, to keep from adding to the deficit. But earlier in the week, Nevada Republican Congressman Dean Heller offered another objection to extending unemployment benefits: He believes it might create a nation of bums.

Think Progress relayed Heller’s remarks, which were made at a Republican Party function in Elko, Nevada, and reported in the local paper:

Heller said the current economic downturn and policies may bring back the hobos of the Great Depression, people who wandered the country taking odd jobs. He said a study found that people who are out of work longer than two years have only a 50 percent chance of getting back into the workforce.

“I believe there should be a federal safety net,” Heller said, but he questioned the wisdom of extending unemployment benefits yet again to a total of 24 months, which Congress is doing. “Is the government now creating hobos?” he asked.

Minorities In the Tea Party?

| Fri Feb. 26, 2010 5:57 PM PST

Tomorrow, Tea Partiers in North Texas plan to celebrate the first anniversary of their anti-government movement with an anti-taxes-for-social-programs rally in front of the Dallas city hall. The scheduled speakers of the event are—surprise!—young-ish people of color. Which is likely a calculated move to counter statistics that suggest this fringe conservative movement is primarily comprised of middle-aged white rural males. To further prove the group's diversity, the Dallas Tea Party (DTP) released a short ad made in the same vein as the Demon Sheep trailer—only (sadly) without the Demon Sheep—attacking MSNBC’s Keith Olbermann, who recently reported on the movement's monoculture. In the ad, Olbermann asks, "Surely there must be blacks who think they are being bled by taxation? Surely there must be Hispanics who think we should have let the auto industry fail?" His queries are spliced with rebuttals ("Here we are!") from black and Latino DTP members. DTP leader Katrina Pierson makes several appearances in the ad and was also featured on Fox Business Channel this week. After receiving praise from the Fox host for being a Latina from a single-parent home and for going to college without government assistance (totally false), Pierson made the usual conservative resources-over-government-handouts statement:

I'm a firm believer that all it takes is one positive adult influence in a child's life to make that difference. If no one had ever told me I could go to college, I probably never would. But that's the kind of thing that Americans need. They need tools and resources and encouragement. Not handouts or welfare or the redistribution of wealth.

Pierson never goes into detail on what type of resources (or social safety-net programs?) are needed to help Americans during the Great Recession, or where these resources should come from. Regardless, it's pretty unlikely that more minorities will join a movement that opposes a public health option, stimulus aid, and Good Taxes—like the ones that enabled people like Pierson to attend a government-funded community college.

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Texas Drinking Problem Gets Worse

| Fri Feb. 26, 2010 4:04 PM PST

Yesterday, Mother Jones aroused a lot of online attention with my story, "Cop Walks Into a Bar And...Arrests You. For Having a Drink." It details how Texas police officers can use a broad public-intoxication law to round up—and sometimes beat—its usual suspects: gays, Latinos, African-Americans, and anybody who looks like a potential illegal immigrant. You don't have to be drinking to be arrested—you just have to be in the wrong place, with the wrong face.

You'd think that's the sort of story that would put cops on the defensive—at least make them a little more circumspect about wielding their authority and their brawn.

Or not. Not according to today's news from the Lone Star State.

My story began with the violent police raid of a Fort Worth gay bar, the Rainbow Lounge, on the 40th anniversary of New York's Stonewall Inn riot. (This, after the police officers had already shaken down two "Hispanic bars" that night, according to one of the cops.) The Rainbow Lounge incident yielded a couple of public-intoxication arrests—and numerous injuries to patrons, including at least one cracked head. Public outrage over the police's extralegal, extra-hamfisted tactics extended way beyond the area's gays and lesbians—at one point, federal authorities were rumored to be investigating the officers' conduct. The Fort Worth Police Department initially took a conciliatory stance: apologizing, investigating, then hiring a liaison for the LGBT community. The state's liquor agency—whose cops participated in the raid—even offered to pay the medical bills of bar patron Chad Gibson, who ended up with a blood clot behind his eye. But today, news comes that despite all the good karma being built rebuilt, local police still want to prosecute two bar patrons for public intoxication—including the seriously injured Gibson.

Vajazzling: The Next Female Craze?

| Fri Feb. 26, 2010 1:55 PM PST

And you thought Vagina Mints were bad.

The latest genital craze is Vajazzling, which is pretty much what you'd fear it is: Women getting a bikini wax and adding Swarovski crystals down there for $50 a pop.

Apparently, Jennifer Love Hewitt is into it. As is a blogger who shared TMI here.

Ok, to each their own. But one fears the whole thing plays into a troubling Heidistein mentality, in which women think fakeness=male bait. (According to an unofficial Gawker poll, it doesn't.)

Not to mention it seems more than a little gratuitous. As our assistant editor Jen Phillips put it: "We’re in a recession with a jobless rate of 10% but somehow women are finding money to put crystals on their waxed mons pubis. Why? How? And why again?"