Mojo - April 2010

Senate GOP Blocks Finance Vote

| Mon Apr. 26, 2010 6:58 PM EDT

Senate Republicans this evening successfully prevented an open debate on a bill that would overhaul how Wall Street and financial markets do business. With a 57-41 vote, the GOP delayed the vote for at least another day; the vote broke down along party lines except for Sen. Ben Nelson (D-Neb.), a centrist Democrat who surprised some by voting against the measure to begin the debate. Here on Capitol Hill, Democrats are expected to schedule another cloture vote soon, even as early as tomorrow, to try to start full debate on financial reform.

In the meantime, talks behind closed doors will continue between Democrats and Republicans in an effort to shape the finance bill in a way that wins over a few Republicans. How far Democrats and Republicans have to go to reach an agreement is unclear. On the one hand, Sen. Richard Shelby (R-Ala.) told reporters earlier today that he felt the bipartisan talks had reached a "tipping point," suggesting that an agreement was near. After the vote, however, Shelby said he still wants to "reach agreement on three big sections," a substantial hurdle for both parties this late in the game given that the Senate has been working on financial reform for almost a year.

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Ben Nelson Opposes Finance Debate

| Mon Apr. 26, 2010 5:31 PM EDT

Sen. Ben Nelson (D-Neb.), a centrist Democrat who'd been wavering on financial reform, just cast a "No" on the Senate's cloture vote to start debating a bill that would rewrite the rules of our financial markets. Nelson's vote is likely to kill Senate Democrats' attempts to immediately begin haggling over the bill, largely crafted by Sen. Chris Dodd (D-Conn.) in the banking committee. The Democrats, who lack a supermajority, needed at least one of 41 Senate Republicans to vote "Yes" in order to begin discussions on the Senate floor. Dodd alluded to some disagreement among Senate Democrats last week, as did Sen. Richard Shelby (R-Ala.) today in remarks with reporters. Mother Jones previously reported that Nelson could be among the Democratic hold-outs, given his centrist stance and the fact that he was on a shortlist of lawmakers visited by Treasury Secretary Tim Geithner last week, who has recently met personally with lawmakers on the fence on financial reform.

Nelson's opposition is sure to give Democrats headaches. This winter, the Nebraska senator made headlines for holding up health care reform talks and for trying to secure a provision in the bill benefiting his home state. On financial reform, Nelson had lately backed a provision in the finance bill that exempted companies who've previously traded derivatives from retroactively posting collateral on their existing derivatives trades, the Wall Street Journal reported. The exemption was supported by Warren Buffett, the billionaire Nebraska business guru who feared that without it, his company, Berkshire Hathaway, would lose a substantial amount of money. However, the exemption was killed earlier today, the Journal reported, signaling a major setback for Nelson and Buffett. The removal of that small provision could have prompted Nelson to vote against cloture this evening.

The votes are still being tallied on the Senate floor for the cloture vote, but without agreement on the Democratic side, the effort is likely to fail.

Obama White House: Reluctant Populists

| Mon Apr. 26, 2010 5:21 PM EDT

Last week, President Barack Obama gave a speech in New York and decried Republican lawmakers for making false accusations about the Wall Street reform pending in the Senate and denounced the "battalions of financial industry lobbyists descending on Capitol Hill" to weaken or kill the bill. But, as I noted, Obama "named no names. He did what too many politicians often do when they describe how special interests game Washington; he stayed vague." In pushing back against Republicans and Wall Streeters, Obama doesn't make it personal. He doesn't call out any particular foe of reform. Such reticence limits whatever populist energy he might be able to generate by fighting for financial regulation reform. And on Monday afternoon, when I gave White House press secretary Robert Gibbs an opportunity to take a populist stab at the Republicans, he declined.

As negotiations regarding the reform bill were underway on the Hill and the Senate was preparing to hold a vote to avoid a filibuster, Gibbs was fielding questions from White House reporters. He fiercely championed the bill and repeatedly noted that if the Senate Republicans blocked it, they would be voting for preserving the status quo. Defending this point about the GOPers, Gibbs got into a sharp exchange with CBS News' Chip Reid, who argued that Gibbs was mischaracterizing the Republican position, claiming that the Republicans wanted a "compromise," not no reform at all. Gibbs, though, would not yield.

When it was my turn to ask a question, I took the opposite tack of Chip Reid. Noting that Obama last week had railed against scheming Wall Street lobbyists and truth-mugging Republicans, I asked if it is the White House view that the Republicans are in league with Wall Street to block reform. Kind of a softball, eh? But I was wondering whether Gibbs would be prepared to say the obvious.

He did not swing at the pitch. Instead, he stuck to press-sec-speak: "I think you know where the president stands on moving forward with this legislation." If anyone is blocking the measure, he added, "the president believes you're not acting in the public's interest."

There was no tough rhetoric about the Republicans being the handmaidens of Wall Street and working with Big Finance titans to screw American families. Gibbs kept it cool. Was this a sign that the White House believes it's close to winning the tussle over the bill—by picking up a few Republicans—and does not want to antagonize its possible partners on the other side of the aisle with fiery words? Perhaps. But if the bill does stall because of Republican obstructionism, will the White House remain so polite?

UPDATE: After all Republican senators and Democrat Sen. Ben Nelson of Nebraska voted on Monday afternoon to prevent a vote on the reform bill, Obama issued this statement:

I am deeply disappointed that Senate Republicans voted in a block against allowing a public debate on Wall Street reform to begin.  Some of these Senators may believe that this obstruction is a good political strategy, and others may see delay as an opportunity to take this debate behind closed doors, where financial industry lobbyists can water down reform or kill it altogether. But the American people can’t afford that. A lack of consumer protections and a lack of accountability on Wall Street nearly brought our economy to its knees, and helped cause the pain that has left millions of Americans without jobs and without homes. The reform that both parties have been working on for a year would prevent a crisis like this from happening again, and I urge the Senate to get back to work and put the interests of the country ahead of party.

A populist thunderclap? Harry Truman might have turned up the heat a bit more.

Corker: "Very Good Chance" on Wall St. Bill

| Mon Apr. 26, 2010 4:20 PM EDT

Sen. Bob Corker (R-Tenn.), a top GOP negotiator on the Senate's financial reform bill, says the odds for a bipartisan bill are "still very, very good." In remarks to reporters today, Corker, who spent weeks this winter as the top GOP negotiator alongside Sen. Chris Dodd (D-Conn.), added that while no agreement between the two parties had been reached—and that differences remained within the parties as well—he was still optimistic about passing a financial reform bill with bipartisan support.

Asked about reports of an alternative GOP financial reform bill, Corker seemed to scoff at the idea, saying he was "not sure about that" and hadn't seen the bill yet. The day's financial-related happenings will come to a head around 5 pm, when the full Senate has a cloture vote (a vote to begin debate on the bill). Democrats and Republicans have spent much of the day in closed-door negotiations trying to resolve differences on the bill. Those disagreements concern parts of the bill on unwinding too-big-to-fail banks and regulating derivatives, the complex financial products that amplified the housing meltdown and spread losses throughout the global economy. But there haven't been any breakthroughs reported yet, setting the stage for a party line vote this evening in which 59 Democrats are anticipated to vote for beginning debate and 41 Republicans will block that debate.

Arizona's Other Crazy New Law

| Mon Apr. 26, 2010 3:41 PM EDT

In an attempt to preserve all that they believe is great about a free and just America, Arizona has opened US culture to two words that previously were the exclusive province of Nazi Germany and the communist bloc: "Papers, please."

You may have heard last week about Arizona's latest bout of nostalgia for a never-was White America, in the form of a draconian "illegal immigration" law that effectively lets police stop anyone and haul them in if they can't prove their Americanness on the spot. (Just a few months ago, MoJo exposed how Texas peace officers were using petty drinking misdemeanors to round up undesirables; Lone Star State cops must be jealous of Arizona now. No more red tape to cover your penchant for profiling!)

But guess what? Arizona's got other new crazy laws! Just a week before criminalizing trips to the supermarket sans birth certificates, Arizona Gov. Jan Brewer signed a decree that empowers state residents to carry a concealed weapon with no license, no registration, and no questions asked. Exciting, right? But wait—there's more! If your gun was made in Arizona, you don't even need to submit to a federal background check to buy it.

The nice thing about concealed-carry permits—which most states have—is that they require the applicant to go through some sort of weapons training proving that they can, you know, not kill the wrong people with their lethal firearm. That had been the case in Arizona. But now, for citizens who opt to get the state's now-pointless permit, "classes are no longer required to be a set number of hours or include any hands-on use of the weapon," according to the Arizona Republic. What's more: "Those who don't get a permit would not be required to get any training or education."

That's so crazy, even gun enthusiasts are aghast. Ex-cop and firearms-safety instructor Dan Furbee says the law won't just kill off his business—and that of every other weapons instructor in Arizona—but it could literally kill off Arizonans:

Finance Reform: Inches or Miles Away?

| Mon Apr. 26, 2010 2:16 PM EDT

A key vote on the fate of financial reform legislation looms today, when the Senate holds its cloture vote (a vote, that is, to begin debate on the bill) at around 5 this evening. Right now, it seems that all 41 Republicans are united against the bill, while most, if not all, Democrats are onboard. Top senators like Chris Dodd (D-Conn.) and Richard Shelby (R-Ala.) continued closed-door negotiations on the bill over the weekend, but it's pretty apparent that they gained little ground, and that the two parties still have a ways to go before reaching a compromise. While Shelby suggested an agreement wasn't far off during a Sunday appearance on Meet the Press, he added, "inches are sometimes miles."

Over the weekend, Dodd, the architect of the current version of financial reform, agreed to beef up his bill's crackdown on derivatives, the opaque products whose value is derived from an underlying source (anything from the cost of wheat to a mortgage's price). The derivatives agreement—which would force them to be traded on a transparent exchange, cleared through a central clearinghouse, and would spin off derivatives trading desks from their larger firms—was partly a move to win over two GOP senators, Chuck Grassley (R-Ia.) and Olympia Snowe (R-Me.), who are both staunch proponents of reining in derivatives. The derivatives changes in Dodd's bill mostly incorporate ideas from a separate derivatives overhaul passed last week by the Senate agriculture committee, a bill Grassley supported. (He was the only Republican on the committee to vote for it.)  Whether Dodd won over Grassley, Snowe, or any other Republicans with the derivatives tweaks remains to be seen.

The real crunch time will come this evening, when the full Senate votes on whether to move ahead with the debate or not. Until then, senators will be making brief statements on the floor for and against the bill (C-SPAN 2, if you're interested). If they pass it, you'll see a feverish battle on the floor by Democrats to win over a Republican or two and pass the bill. If not, the behind-closed-doors debate will stretch on.

 

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Gay Parents and Catholic Schools

| Mon Apr. 26, 2010 2:15 PM EDT

In Boulder, Colorado, a same-sex couple recently went to register their children for a new school year at the local Catholic school. Instead of being allowed to re-register, the parents were asked to decide whether the school was a "good fit" for their daughters. The message was clear: because of their parents' relationship, the girls were no longer welcome. The matter made its way up the Church hierarchy, and Charles Chaput, the very conservative archbishop of Denver, eventually issued a statement on the controversy:

If parents don’t respect the beliefs of the Church, or live in a manner that openly rejects those beliefs, then partnering with those parents becomes very difficult, if not impossible. It also places unfair stress on the children, who find themselves caught in the middle, and on their teachers, who have an obligation to teach the authentic faith of the Church.... Persons who have an understanding of marriage and family life sharply different from Catholic belief are often people of sincerity and good will.  They have other, excellent options for education and should see in them the better course for their children.

Commonweal magazine, which my dad edits, has published a beautiful essay riffing off these events. It's written (anonymously) by a lesbian parent who sends her kids to Catholic school. In addition to being well-written, it's the biggest piece of Andrew Sullivan bait I have ever read in my life. Take this, for example, about coming to terms with being gay and (very) Catholic: 

During my years in Boston I dated a couple of guys, one of them a former seminarian and fellow theology student. He and I attended a talk by Andrew Sullivan, then the editor of the New Republic and an out gay Catholic. I sat and listened, and knew for the first time with a semblance of peace what I had come to know in recent years in more conflicted fashion: that I was, and would always be, a gay Catholic.

And this:

Although many have tried to show me the door out of the church, I never, in my first years with my partner, pondered leaving. Like Andrew Sullivan, I think that "the issue of eros is trivial in the face of consecration, prayer, and meditation." I thought less and less about "being gay," per se, and continued the practice of my faith. In my work life and my home life I strove to be more loving and that itself was struggle enough. During this time the local diocese saw fit to recognize my professional work with an award at their annual prolife banquet. With some dismay, I dutifully accepted the award and shook the hand of the bishop, who is, in many respects, Archbishop Chaput’s twin, and pondered the irony of it all.

I really am eager to read what Andrew has to say about the essay, so I'm writing this to prod him to read it and respond. AND..... FAIL. Sullivan linked to it last week. But I also want to just point you in its direction. It's a great piece of writing. Check it out.

Climate Bill Negotiations In Disarray

| Mon Apr. 26, 2010 11:03 AM EDT

The state of climate and energy legislation was thrown into disarray over the weekend, as the lead Republican on the bill, Lindsey Graham, threatened to walk away from negotiations over tensions on timing. With bipartisan agreement in peril, John Kerry, the lead Democrat on the bill, pushed off the roll out of the bill initially scheduled for today.

"For more than six months, Lindsey Graham, Joe Lieberman, and I have been meeting for hours each day to find a bi-partisan path forward and build an unprecedented coalition of stakeholders to pass a comprehensive climate and energy bill this year," Kerry said in a statement Saturday. "We all believe that this year is our best and perhaps last chance for Congress to pass a comprehensive approach. We believe that we had reached such an agreement and were excited to announce it on Monday, but regrettably external issues have arisen that force us to postpone only temporarily."

Read more on the state of negotiations over on Blue Marble.

The Question Goldman Won't Answer

| Mon Apr. 26, 2010 10:24 AM EDT

Goldman Sachs, the besieged Wall Street baron, fired back at a Senate subcommittee this weekend by releasing a report of its own on the bank's role in the subprime mortgage markets leading up to the crash of 2008. The report (pdf) is a clear attempt by Goldman to counter claims that it intentionally "shorted," or bet against, the housing market, even as it peddled the kinds of mortgage-related products its traders were wagering would fail. Its loss of $1.7 billion in residential mortgage-related products in the 2008 fiscal year, and its small market share in the mortgage industry, are evidence that the firm was hardly the subprime bogeyman it's been made out to be, Goldman claims. "Goldman Sachs did not take a large directional 'bet' against the US housing market, and the firm was not consistently or significantly net 'short the market' in residential mortgage-related products in 2007 and 2008," the company says.

Of course, the story is far murkier than that. As McClatchy reported last year (and as Goldman neglects to mention), in 2006 and 2007 Goldman marketed some $39 billion in securities backed by toxic home loans to clients but neglected to mention that Goldman was betting against that same market. McClatchy also reported that Goldman, which had decided to start buying insurance against (i.e., betting against) the housing market in late 2006, used "offshore tax havens to shuffle its mortgage-backed securities to institutions worldwide, including European and Asian banks, often in secret deals run through the Cayman Islands, a British territory in the Caribbean that companies use to bypass U.S. disclosure requirements."

But there's one looming question that neither Goldman nor the press has answered: How much exactly did Goldman make from its big-time bets against the housing market? Goldman spokesman Lucas van Praag said in a statement on Saturday that the report released by the firm "demonstrates conclusively that we did not make a significant amount of money in the mortgage market"; however, in the set of emails released by the Senate investigations subcommittee, Goldman CEO Lloyd Blankfein writes in an email that "Of course we didn't dodge the mortgage mess. We lost money, then made more than we lost because of shorts." In a different email released by the subcommittee, Goldman CFO David Viniar reacts to news of losses in the mortgage markets, and of Goldman's subsequent gains, by writing, "Tells you what might be happening to people who don't have the big short."

How much Goldman made—whether it's negligible as company purports it to be, or more significant than that—remains to be seen. Did the firm merely try to counterbalance its long bets on the housing market with the shorts? Or did it reap a massive payday? This week's hearings in the investigation subcommittee, which bring to Washington top Goldman executives like Blankfein, could finally shed some light on this mystery.

Supreme Court to Decide if Big Business Can Judge Itself

| Mon Apr. 26, 2010 8:42 AM EDT

The ever-more business friendly Supreme Court will hear oral arguments today in a case that has the potential to shut a whole lot of regular Americans out of the justice system. The nation’s largest rent-to-own furniture company, Rent-a-Center, has asked the court to decide essentially whether huge corporate players should be able to use one-sided contracts to opt out of the civil justice system and judge themselves when customers and employees want to sue for discrimination or other abuses.

The case has enormous implications for big business, which has for years now been able to avoid legal accountability and big jury awards for employment discrimination, fraud, and even sexual assault by forcing people to sign what’s known as a mandatory arbitration clause as a condition of getting a cell phone, using a credit card, buying a car, or getting a job. The clauses force people to bring any complaint against the company before a private arbitrator, hired by the company, whose decisions can’t be reviewed by a judge in most cases. Not surprisingly, those arbitrators rarely find in favor of the little guy. But over the past couple of years, the little guy has been fighting back and occasionally winning important victories.

People like Jaime Leigh Jones have, against great odds, prevailed over much more powerful entities once they’ve gotten inside a regular courtroom. Leigh is the KBR/Halliburton employee who alleged that she was gang raped by her co-workers in Iraq and then confined to a storage container by her employer. She recently prevailed in a challenge to the arbitration clause in her contract that would have forced her to have her rape case heard by a Halliburton-hired arbitrator rather than a jury. Deborah Williams and Richard Welshans, after years of litigation, last year also won a ruling in federal court allowing them to finally bring a fraud lawsuit against the Coffee Beanery, a company they allege duped them into sinking hundreds of thousands of dollars into a doomed franchise. (The victory, unfortunately, came too late to save their house.) But if the Supreme Court rules for Rent-a-Center in the case argued today, even those rare victories will become nonexistent. That's because, as Public Citizen’s Robert Weissman has written, "The question presented to the Supreme Court in Rent-A-Center is, essentially: Can a corporation's hand-picked arbitrator decide whether it is fair for the company to hand-pick its arbitrator?"