Felix Salmon has a good rundown of Chris Dodd's proposed regulatory reforms, and overall he finds them considerably better than the proposals that came out of the Treasury.  But on one point he thinks Dodd has it wrong:

The Agency for Financial Stability is the agency charged with monitoring systemic risk — a job which under Treasury’s proposal would be given to the Federal Reserve. On this I think I have sympathy with Treasury: the Fed in general, and the New York Fed in particular, is better placed to monitor these risks than a brand-new agency with no direct ability to supervise banks or to break them up. A giveaway appears on page 3 of the discussion draft:

"The Agency for Financial Stability will identify systemically important clearing, payments, and settlements systems to be regulated by the Federal Reserve."

Clearly, the Fed is going to play a necessary role here, and it’s not exactly rocket science to identify key clearing and settlement systems. So why take that job from the Fed and give it to powerless technocrats in Washington?

I think I'll take Dodd's side here.  As Felix says, there's no question that the Fed is going to have a major role here no matter what: it's just too big and too central to the banking system not to.  But there are at least a couple of big reasons not to give it unfettered authority.  First, the Fed has demonstrated pretty conclusively over the past few years that it's too close to the banking industry, and too invested in its success, to ever be objective about the broad level of risk in the banking system.  Second, pronouncements from the Fed are too powerful.  The Fed would (rightly) be very reluctant to make public statements about systemic risk for fear of sending markets into a tailspin.  So it wouldn't.

The problem with Dodd's Agency for Financial Stability, of course, is that it might end up with a fairly limited amount of substantive power.  But that's not entirely a bad thing as long as it has reputational power.  Standing clearly outside the banking system would likely help it develop a reputation as an honest broker that demands attention — or, at very least, a counterweight to the institutional and industry-centric judgments of the Fed.  That's no bad thing.

Overall, it's a mixed bag.  On balance, though, I think there's a strong need for a non-Fed voice, one that considers systemic risk to be its primary mission, not its 17th most important one.  Besides, look at the Fed's track record on assessing systemic risk so far.  How much worse can a new agency be?  Might as well give it a try.

UPDATE: More detail on Dodd's proposal here from Mike Konczal.

The coal front group American Coalition for Clean Coal Electricity has been in hot water lately for employing an astroturf group that forged letters to Congress opposing the House climate bill—and then for possibly lying under oath about their position. Now ACCCE is in trouble again—for misrepresenting the views of two major veterans groups in an email hyping coal's role in energy security.

The email, sent in anticipation of Veterans' Day, argues that coal can play a vital role in reducing America's dependence on foreign oil and cites two groups—VoteVets and Operation Free. The problem: both of those groups are strong supporters of climate legislation—in part because of the national security threats posed by global warming—while ACCCE has been working energetically to undermine a bill.

Here's the email:

With Veterans Day around the corner, we wanted to take a moment to reflect on all the military personnel who are involved in ensuring our country is protected.

Energy security is one issue that has become increasingly important to our veterans. In fact, national veterans groups Votevets and Operation Free are urging the government to become more energy independent and less reliant on foreign oil.

We can do this by using the abundant domestic fuels we already have. With more than 250 billion tons of recoverable coal reserves, the United States has more coal than the Middle East has oil.

We need to start putting our coal to use - and technologies such as hybrid-electric cars and cleaner, more efficient power plants are making it easier for us to do that.

"This is insulting to all of the Veterans who are fighting to protect America’s national security by supporting clean, American power," wrote David Solimini, Operation Free's media director, in a blog post.

"Carbon pollution causes climate change, and that makes world a less stable, more dangerous place," Frankie Sturm, communications director for Operation Free, told Mother Jones. "As if that isn't bad enough, it's simply unacceptable that the ACCCE would politicize Veterans Day to safeguard its own profit."

Loch Ness Golf Balls

Whimsical: A group of Scottish scientists recently went looking for the Loch Ness monster. Not-so-whimsical: They found no trace of Nessie. Instead they found evidence of...old people. In the form of golf balls. Thousands of them. The balls came from a nearby driving range popular among tourists.

So clearly this is fodder for another, even sadder, verse of "Puff, the Magic Dragon" about Jackie Paper's insipid golden years. But if the coming-of-age overtones alone aren't depressing enough for you, consider this: According to CNN, the 300 million golf balls that are lost or discarded every year in the US will take up to 1,000 years to decompose. During that time, they can contaminate surrounding ecosystems with heavy metals:

It was found that during decomposition, the golf balls dissolved to release a high quantity of heavy metals. Dangerous levels of zinc were found in the synthetic rubber filling used in solid core golf balls. When submerged in water, the zinc attached itself to the ground sediment and poisoned the surrounding flora and fauna.

And friendly water monsters, too, no doubt. Maudlin!



The Florida bonneted bat (Eumops Floridanus) is one of 249 species which are candidates for federal protection under the Endangered Species Act. Since taking office this year, President Obama has only listed one new species (a Hawaiian plant) as endangered, and is scheduled to list another species in December. In contrast, noted conservation foe George W. Bush listed an average of 8 species a year, and Bill Clinton listed an average of 65 species a year. The Florida bonneted bat is currently being reviewed for protection, but it really can't come fast enough. There are only an estimated 100 individuals left.

The Florida bonneted bat lives only in Florida, and is one of the largest bats in North America, with a wingspan of more than a foot and a half. While its wings are large, the bat's body is about the size of a sparrow's: three to four inches long and weighing only one to two ounces. The bat has been spotted in North Fort Myers and in near Miami, roosting in barrel-tile roofs or in the hollow trunks of trees. One of the largest known colonies of the Florida bonneted bat lives in a suburban backyard, first in a single-celled, and now in an upgraded three-chamber bat house built by the Organization for Bat Conservation. The bat house now has more than a dozen bats living in it, including an albino bat born around 2003.

While some Floridians are making a concerted effort to save the bat, its populations have been compromised by pesticide use, which poisons the insects that are the bat's main food source. In addition, habitat loss continues to be an issue. The bats prefer large, old trees with deep cavities for roosting and rearing young. But many of these trees are removed for various development projects, like one with eight bats in it that was removed back in 1979. Twenty-four species have gone extinct waiting to be listed as endangered. Hopefully, now that it's actually under review, the Florida bonneted bat won't be among them.

Political Correctness

Is "political correctness" to blame for the Ft. Hood massacre?  Did the military fail to confont Nidal Malik Hasan's growing disillusionment with the war because it was afraid of appearing overly critical of Muslims?  Marc Lynch pushes back:

This framing of the issue is almost 100% wrong. There is a connection between what these critics are calling "political correctness" and national security, but it runs in the opposite direction. The real linkage is that there is a strong security imperative to prevent the consolidation of a narrative in which America is engaged in a clash of civilizations with Islam, and instead to nurture a narrative in which al-Qaeda and its affiliates represent a marginal fringe to be jointly combatted.

....The grand strategy of al-Qaeda and its affiliated ideologues is, and has always been, to generate a clash of civilizations between Islam and the West which does not currently exist....To make inroads with mainstream Muslim communities, they need to change the context in which they live — to render their status quo unacceptable and to make their narrative resonate.  And for that to happen, they need a lot of help — for the targeted governments to take inflammatory measures against their Muslim populations, for the non-Muslim citizens in the targeted countries to discriminate against them, and for the media to fan the flames of hatred and mistrust.

....A lot of people — some well-meaning, some clowns or worse — evidently want the American response to the Ft. Hood shootings to revive the post-9/11 "war of ideas" and "clash of civilizations" anti-Islamic discourse.  It's a jihad, they shout, demanding careful scrutiny of the loyalty of American Muslims.  That's what they seem to mean by the demand to throw away "political correctness" and confront the ideological menace.  The overall effect of their recommendations, however,  would be to revive the flagging al-Qaeda brand and to greatly strengthen the appeal of its narrative.  And that's exactly what we should not want.

The whole piece is worth a read.  The military almost certainly has some lessons to learn from this tragedy — as do the rest of us — but that plural is deliberate.  Lessons, not lesson.

Quote of the Day

From RNC chairman Michael Steele, talking to Roland Martin on a new Sunday talk show aimed at black audiences:

MARTIN: One of the criticisms I've always had is Republicans — white Republicans — have been scared of black folks.

STEELE: You're absolutely right. I mean I've been in the room and they've been scared of me.

Via Steve Benen.

On Reading the Bill

Should members of Congress read the bills they vote on?

It seems like the answer is an obvious "yes." That intuitive response is what the Sunlight Foundation is counting on. Sunlight, a Washington-based transparency and good government group, has been leading the charge for the "read the bill" movement. But a closer look at the "Read the Bill" website reveals what's really going on.

Sunlight isn't actually lobbying for a law requiring that members of Congress read legislation before voting on it. How would you enforce such a law? Quizzes? Swearing under oath? Instead, Sunlight is pushing for the institution of a "72-hour rule" requiring that non-emergency legislation be posted online for three days before debate begins. That is a good idea (pretty much every other good government group has endorsed it), but it won't necessarily do anything to ensure that members of Congress read the bill, let alone understand it. In fact, if you take a look at the video promoting their campaign on this page, it's clear that Sunlight is using the oldest trick in the process reformers' book: using current political issues, in this case right-wing rage about health care and the stimulus, to get people interested in process reforms—in this case, the 72-hour rule.  

Most process issues in Congress are only important to one party at a time, depending on whether that party is in or out of power. (Sunlight's Paul Blumenthal has written a history of the 72-hour rule that highlights this very problem.) Reading the bill, involving the minority in legislation, not writing laws "behind closed doors," protecting the filibuster, oversight—these things suddenly become much more important when your party is out of power. (Update: term limits, too!) Likewise, governing parties love to complain about the filibuster supermajority requirement, delaying tactics, the slow pace of judicial confirmations, and so on. It's very easy to find members of Congress contradicting themselves on these questions depending on whether they're in the majority or the minority.

Of course, the flagrant hypocrisy of most lawmakers doesn't mean they're are always wrong. Posting bills online will give outside groups like Sunlight more time to analyze legislative language and figure out what exactly the bills do. That's probably a net good. But the real issue is not whether your representatives simply read the bills they vote on. It's whether they understand them. For that, you need far more sweeping reform.

Sunlight has slammed Rep. John Conyers (D-Mich.) for asking: "What good is reading the bill if it’s a thousand pages and you don’t have two days and two lawyers to find out what it means after you read the bill?" But Conyers is right. Bruce Bartlett explains:

Counterinsurgency or counterterrorism?  Traditionally, the former requires lots of troops in order to root out and defeat a local insurgency while protecting the civilian population, while the latter requires only a small, light force to chase after bad guys and kill them.  But Spencer Ackerman reports that in addition to top commander Gen. Stanley McChrystal, the two commanders of U.S. special forces, Vice Adm. William McRaven and Vice Adm. Robert Harward, both favor big troop increases to back up their counterterrorism efforts:

The fact that JSOC veterans like McRaven, Harward and McChrystal favor an overall counterinsurgency strategy with a counterterrorism component demonstrates that the military no longer believes distinguishing between the two is tenable in the Afghanistan war. “Special Operations Forces that were traditionally used for counterterrorism better understand how their capabilities fit into a counterinsurgency campaign than perhaps they did when the wars in Iraq and Afghanistan began,” said Andrew Exum, a veteran of both wars and a fellow at the Center for a New American Security who over the summer advised McChrystal in a review of Afghanistan strategy.

....McRaven runs a secretive detachment of Special Forces known as Task Force 714 — once commanded by McChrystal himself — that the NSC staffer described as “direct-action” units conducting “high-intensity hits.”....In a move signaling his own importance to McChrystal, Harward will arrive in Afghanistan later this month to command a new task force, known as Task Force 435, that will take charge of detention facilities in Afghanistan.

....The advice of McRaven and Harward to the White House strategy review, the [NSC] staffer said, was to push for a “heavy, heavy, heavy COIN [counterinsurgency] presence” in select population centers like the capitol city of Kabul, while relying on new or expanded counterterrorism units like Task Force 714 for hunting and killing terrorists outside of those population centers — particularly in areas like the porous border between Afghanistan and Pakistan, a key transit point for Taliban and al-Qaeda-affiliated insurgents.

Basically, there seems to be no support anywhere in the military for a light footprint in Afghanistan.  In a way, that's no surprise: why not get as many troops as you can, after all?  But it also highlights Obama's dilemma: regardless of where his heart is, it's almost impossible to defy military advice when it's nearly unanimous.  Picking one side vs. another is one thing, but trying to impose your own strategy on the entire bureaucracy is quite another.  It sounds like the light footprint never really had a chance.

Photo by flickr user landahlauts used under a Creative Commons license.Photo by flickr user landahlauts used under a Creative Commons license.Ever wondered why our country's laws so often favor the rich over middle and working-class people? Consider this: Last week, the Center for Responsive Politics released its latest survey of congressional financial disclosure forms. Of the 535 voting members of Congress, over 44 percent of—237 to be exact—are millionaires. Fifty members have net worths of at least $10 million, and seven are worth more than $100 million. (I profiled Rep. Darrell Issa, a California Republican who is now the richest member of Congress, in the September/October issue of Mother Jones.)

By comparison, around one percent of Americans are millionaires. There is no other minority group that is as overrepresented in Congress as millionaires are. For black people to be similarly overrepresented compared to their percentage of the population, the entire Congress would have to be black. (Actually, even that wouldn't be enough.) If Mormons were similarly overrepresented, there would be 75 of them in Congress (there are 16 right now).

So next time that the Congress does something that seems outrageously biased in favor of rich people—say, slashing top income tax rates or spending $440 billion over 10 years to cut estate taxes on one quarter of one percent of Americans—remember who members of Congress are really helping: themselves.

There was just one "no" vote on advancing a climate and energy bill among the Democrats on the Environment and Public Works Committee last week: Max Baucus. Now the Montana senator plans to claim jurisdiction over significant portions of the bill in his role as chair of the Finance Committee, starting with a hearing on the topic this morning.

Baucus, who has advocated for lower near-term emissions targets and provisions to lower the overall costs of a climate bill, is probably hearing from lobbyists of all stripes these days. But none are likely to have his ear like the dozen former staffers who are now lobbying on climate and energy policy for groups like the American Petroleum Institute, the Business Roundtable, Koch Industries, and the National Biodiesel Board. The Sunlight Foundation put together a chart illustrating the relationships between Baucus, his former staffers, and their clients. 

Former Baucus staffers are now lobbying on behalf of clients who both support and opposed climate legislation. The includes four former chiefs of staff who have gone through the revolving door. Among them is former chief of staff David Castagnetti, who works for Mehlman Vogel Castagnetti and represents a number of groups who oppose the legislation or have sought to weaken it, like the American Petroleum Institute, the Business Roundtable, Edison Electric Institute, the Air Transport Association of America and Koch Industries.

Michael Evans, a former legislative director, now works at K&L Gates, and has clients ranging from the Environmental Defense Fund, which is staunchly pro-climate bill, to Peabody Coal, one of the largest coal companies in the country and a fierce opponent of carbon regulations. Former chief tax counsel Nick Giordano, now at Ernst & Young, lobbies for Boeing Co., Exxon Mobil, General Electric, National Biodiesel Board, the National Hydropower Association, and the Solar Energy Industries Association.

Ethics rules only require a one-year "cooling off" period before staffers-turned-lobbyists can approach their former bosses.