Chris Hayes writes that after the torture and surveillance abuses of the past eight years, we need a new Church Committee to thoroughly examine the role and proper function of the intelligence community and the executive branch.  But we shouldn't do it with Frank Church's model in mind:

At one point Church referred to the CIA as a "rogue elephant," causing a media firestorm. But the final committee report shows that to the degree the agency and other parts of the secret government were operating with limited control from the White House, it was by design. Walter Mondale came around to the view that the problem wasn't the agencies themselves but the accretion of secret executive power: "the grant of powers to the CIA and to these other agencies," he said during a committee hearing, "is, above all, a grant of power to the president."

A contemporary Church Committee would do well to follow Mondale's approach and not Church's. It must comprehensively evaluate the secret government, its activities and its relationship to Congress stretching back through several decades of Democratic and Republican administrations. Such a broad scope would insulate the committee from charges that it was simply pursuing a partisan vendetta against a discredited Republican administration, but it is also necessary to understand the systemic problems and necessary reforms.

Yes.  The problem isn't with the CIA or the NSA per se, it's with the instructions they got from the president.  For the most part, they've been doing precisely what he wanted done, and they were provided with exhaustive legal opinions telling them it was OK.  Their fear is that an investigation is likely to turn exclusively into an agency witch hunt, and that's a legitimate concern if they end up bearing the brunt of the criticism when it's their political masters who should be bearing it instead.

Beyond those legitimate misgivings, though, lies something larger. As Chris notes, conservatives have built up a mythology in the years since the original Church Report was released that blames it for hobbling U.S. intelligence capability for decades.  There's little to back up such a view, though, and Richard Clarke in particular has no time for it:

"What bothers me," he says, "is the CIA's tendency whenever they're criticized to say, If you do your job, if you do oversight seriously — which Congress almost never does — then we'll pout. Some of us, many, will not just pout; we'll retire early. Our morale will be hurt." And if morale is hurt and the agencies are gutted, they argue, the country will be exposed to attack. In other words: "If you, Congress, do oversight, then we'll all die. Can you imagine FEMA or the agricultural department saying we're all going to retire if you conduct oversight?" Clarke asks in disbelief.

The principle of oversight aside, the right-wing story about the committee ruining intelligence capabilities for a generation posits a golden age of über-competent intelligence-gathering that simply never existed. The activities described in the committee report, more often than not, have a kind of Keystone Kops flavor to them. "From its beginning," says Clarke, "when [the CIA] does covert action as opposed to clandestine activity...it regularly fucks up. I remember sitting with [Defense Secretary] Bob Gates when he was deputy national security adviser, and he said, I don't think CIA should do covert action; CIA ought to be an intelligence collection and analysis [agency]."

I like the idea of a latter day Church Committee, but mainly I like it if it has a strong focus not just on the intelligence community itself, but on the entire apparatus of oversight and executive branch secrecy.  Even the interrogators brandishing the power drills and death threats, revolting as they are, don't deserve condemnation if the guys at the top who were quite plainly cheering them on get off without so much as a slap on the wrist.  We need to investigate the entire system, not just the hands that carried out the orders.

Clean Water

SODIS is a simple method for disinfecting water in areas where lots of kids get sick and die from bad water.  Basically, you pour water into plastic bottles, put 'em on your roof for a day or two, and the water is clean.  But Katja Grace points us to a study showing that it's surprisingly hard to get people to do this:

The technical barrier is that people don’t do it much. About thirty two percent of participants in the study used the system on a given day....The leader of the study, Daniel Mausezahl, suspects a big reason for this is that lining up water bottles on your roof shows your neighbors that you aren’t rich enough to have more expensive methods of disinfecting water.

....Fascinating as signaling explanations are, this seems incredible. Having live descendents is even more evolutionarily handy than impressing associates. What other explanations could there be? Perhaps adults are skeptical about effectiveness?....Parents are known for obsessive interest in their children’s safety. What’s going on?

Skepticism sounds like a reasonable guess.  Or maybe parents know that their kids drink water from lots of different places, so cleaning up their own supply doesn't seem very effective unless everyone else is doing it too.  Or maybe it just takes a while for cultural norms to change.

In the wake of Ted Kennedy's death, there's been a lot of speculation about who could fill his shoes in the senate. The answer, of course, is no one: Kennedy was unique—his credibility as a liberal combined with his seniority, his famous name, and his ability to get things done ensured that. Matt Yglesias made a good point about Kennedy's seniority yesterday:

[I]t’s worth being clear about the fact that he had such an impressive career in part precisely because he initially got a job he wasn’t qualified for. The Senate operates largely on the basis of seniority. A guy who can enter his fifth term and only be 54 years old is a guy who’s going to be able to wield some major influence for a long time.

Yglesias goes on to talk about how Bernie Sanders (I-Vt.), who is as reliably liberal as they come, will probably never wield major influence in the senate because he was in his 60s when he was first elected. But Sanders isn't the person to look at here: his Vermont colleague, Pat Leahy, is. Leahy was in his mid-thirties when he was first elected. Leahy, who is 69, is a year and a half older than Sanders, but Sanders is 75th in Senate seniority. Leahy is third. When Robert Byrd (D-W.Va.) and Daniel Inouye (D-Hawaii) retire (and they're both in their eighties, so that could be very soon), Leahy will be the most senior senator. He'll probably be in his early-to-mid seventies at that time. Kennedy got a lot of good things (voting against the Iraq war and trying comprehensive immigration reform) done in his seventies. Will Leahy be as effective?

Banking Health

Can the banking industry earn its way back to good health?  In the long run, sure.  But in the short run, things don't look so hot.  Here's today's press release from the FDIC:

Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported an aggregate net loss of $3.7 billion in the second quarter of 2009, a decline of $8.5 billion from the $4.8 billion in profits the industry reported in the second quarter of 2008.

....Indicators of asset quality continued to worsen during the second quarter. Both the quarterly net charge-off rate and the percentage of loans and leases that were noncurrent (90 days or more past due or in nonaccrual status) reached the highest levels registered in the 26 years that insured institutions have reported these data.

...."Deteriorating loan quality is having the greatest impact on industry earnings as insured institutions continue to set aside reserves to cover loan losses," Chairman [Sheila] Bair noted. "Of all the major earnings components, the amount that insured institutions added to their reserves for loan losses was, by far, the largest drag on industry earnings compared to a year ago."

There's a vicious circle at work too.  As more banks go under, the FDIC has to assess higher fees to banks to keep its insurance fund solvent.  Those higher fees depress profits, which in turn keeps the industry underwater.  That's part of what happened this quarter: if it weren't for a special assessment of $5.5 billion the industry would have shown higher earnings.

Bank health, like employment, is a lagging indicator, so today's report doesn't necessarily mean the economy isn't starting to improve.  But the fact that loan quality continues to deteriorate and writeoffs continue to skyrocket sure isn't good news.  If unemployment stays at 10% or above for the next year, as the CBO now projects, this isn't going to turn around any time soon.

Need To Read: August 27, 2009

Today you're getting one torture-related link and a lot on the death of Sen. Ted Kennedy:

Like most bloggers, I also use twitter. I mostly use it to send out links to interesting web content like the stuff above. You can follow me, of course. David Corn, Mother Jones' DC bureau chief, is also on twitter. So are my colleagues Daniel Schulman and Rachel Morris and our editors-in-chief, Clara Jeffery and Monika Bauerlein. Follow them, too! (The magazine's main account is @motherjones.)

Senior Airman Brenton Swift watches as Staff Sgt. Michael Hebron monitors the needle insertion site during a platelet donation at the Air Force Theater hospital July 24 at Joint Base Balad, Iraq. Fifty percent of donations collected are used outside the wire. Airman Swift is a 332nd Expeditionary Aircraft Maintenance Squadron aircraft armament systems journeyman, and Sergeant Hebron is a 332nd Expeditionary Medical Support Squadron aphaeresis technician. (U.S. Air Force photo/Senior Airman Nicole Enos)

Sugar Pills: Turns out placebos work better in some countries than others.

Ted Kennedy: With the Liberal Lion gone, healthcare reform seems even more distant.

Yellow Pages: Does anyone ever use phone books anymore? Then why does Kevin Drum get four of them every year?

Foxes in Danger: The creepy-looking, probably gamey-tasting flying foxes are in danger from legal hunting. [MongaBay]

Passing the Torch: Who will take Kennedy's seat? And when?

Put a Cork In It: There's a new campaign to get Americans to recycle their corks, just like those nice Canadians up the street. [Consumerist]

PO 101: Don't know what the Public Option is? Get a primer from Nikki Gloudeman.

"Socially Useless"

Now here's a bank regulator who's talking like he's found religion.  The Guardian glosses an interview in the British Prospect:

Lord Turner, chairman of the Financial Services Authority, warned bankers that he would support a new wave of taxes on the City to prevent excessive profiteering if they continue to take excessive risks.

In a searing critique of the industry, Lord Turner described much of the City's activities as "socially useless" and questioned whether it has grown too large...."The really fundamental question is whether the overall level of financial services pay is a consequence of the swollen financial sector which has resulted from oversimplistic financial deregulation. This is not a question that any of the politicians have focused on but I think it's an important and legitimate issue of public concern," he said.

....He told Prospect: "If you want to stop excessive pay in a swollen financial sector you have to reduce the size of that sector or apply special taxes to its pre-remuneration profit. Higher capital requirements against trading activities will be our most powerful tool to eliminate excessive activity and profits.

"And if increased capital requirements are insufficient I am happy to consider taxes on financial transactions — Tobin taxes."

Italics mine.  The FSA didn't exactly cover itself in glory during his predecessor's term, so maybe Turner is just talking tough because he wants to keep his job.  But if that's what it takes to turn a technocrat into a populist, then that's what it takes.  I sure wouldn't mind hearing a harangue like this from an American regulator once in a while.

As for the transaction tax, I don't know how practical that is.  But if it can be made to work, it's a good idea.  Not only would it raise some money, but it would put a crimp in some of the most highly leveraged investment schemes, which fundamentally depend on tiny returns multiplied by billions of dollars.  A transaction tax would make a lot of them unprofitable.  So it's a twofer.

Ben's Second Term

What do we have to look forward to from Ben Bernanke's second term as chairman of the Fed?  The New York Times asked a bunch of economists for their predictions.  Here's Mark Thoma:

My worry is that as time passes, we’ll forget how bad things were and the desire to impose necessary new regulation will fade. Here’s where I think Mr. Bernanke’s experience will be crucial. He was there at every step in the development of the Fed’s response to the crisis and he will not soon forget the problems he faced (nor repeat his mistakes), making it more likely that he’ll be a forceful and passionate advocate for new regulation before Congress. [Italics mine.]

Boy, do I hope this is true.  But it strikes me as woefully wishful thinking.  One of the reasons I opposed reappointing Bernanke is that I'd like to have someone running the Fed who's serious about reregulating the financial industry, both at a macro and a consumer level.  With Bernanke, though, we're taking a flyer.  We're hoping that the crisis of the last two years has fundamentally changed his view of market self-regulation, and that he'll apply the same suppleness and creativity he showed dealing with the meltdown to dealing with post-crisis regulatory issues.  And maybe he will.  But people rarely change lifelong worldviews even after they've lived through a catastrophe, and Bernanke has done nothing to make us think he's an exception.  Contra Mark, my guess is that when it comes to actual, concrete legislation and rulemaking, he'll revert to the same Ben Bernanke he's always been.  When that happens, we'll have missed our only chance for years to really reform our financial system.

And here's former Fed economist Vincent Reinhart with another prediction:

The White House will likely learn that a Fed chaired by Ben Bernanke will follow a policy uncomfortably tight as the 2012 election looms into sight. [Italics mine.] Bernanke has espoused a commitment to low inflation over his entire career. He also is a democratic and consultative chairman, so the voices of monetary conservatives among Fed officials will be heard loudly and frequently.

Now this one I believe.  That's what Fed chairmen usually do to Democratic presidents, after all.

In a major victory for the business press and anyone who longs for more transparency at the Federal Reserve, a federal judge in New York ruled on Tuesday that the Fed must fork over  financial rescue records to two Bloomberg journalists. The reporters, Mark Pittman and Craig Torres, had sued the Fed's board of governors after it refused to hand over bailout-related documents. What's more, the Fed had refused to search for certain information relating to its actions in early 2008—namely, when the Fed's New York branch loaned JPMorgan Chase nearly $13 billion to buy Bear Stearns. (JPMorgan and Bear Stearns ended up paying back the $13 billion loan plus $4 million in interest.)

The Fed's bailout manuevers have come under criticism from members of Congress (especially Rep. Alan Grayson (D-Fla.)) and the media, including our own Nomi Prins. Like when the Fed let Goldman Sachs use investment-bank risk models even after it had converted into a bank holding company in order to qualify for bailout funds, allowing Goldman to make big-time, risky bets with taxpayers' money.

Needless to say, this is an important victory for the press covering the bailout, and for shedding some light on the incredibly opaque actions the Fed has taken to rescue the financial system.  The decision's timing couldn't be better. It comes right after Fed chairman Ben Bernanke was nominated for a second term, so closer scrutiny of his decisions when the economy was near rock-bottom will be in the spotlight. The decision also comes as the Treasury Dept. weighs letting the Fed play a larger role in financial regulation by monitoring those "too big to fail" banks in our system—an idea I and others strongly oppose. I'll be curious to see what those two crusading Bloomberg reporters turn up.