Mojo - May 2010

Rahm Emanuel Battles Fed Audit

| Tue May 4, 2010 9:24 AM EDT

Sen. Bernie Sanders (I-Vt.), the lead sponsor of a new rule to audit the Federal Reserve, is running up against some formidable opposition from nearly all sides. Most notably, Sanders told the Huffington Post that his provision, which has a good chance of winning 60 or more votes in the Senate, is opposed by the White House, and that chief of staff Rahm Emanuel has pushing back against the Fed audit. "I think momentum is with us," Sanders told HuffPo. "But I've gotta tell you, that on this amendment, you're taking on all of Wall Street, you're taking on the Fed, obviously, and unfortunately you seem to be taking on the White House, as well. And that's a tough group to beat."

The amendment would allow the Government Accountabililty Office (GAO) unprecedented access to the Fed's records, and would require the opaque, hybrid public-private institution to disclose who received the $2 trillion given out in loans by the Fed since the onset of the financial crisis. To one's surprise, Fed chairman Ben Bernanke and his acolytes have vehemently opposed the provision, saying it would taint the Fed's decision-making with politics and partisanship.

Sanders, though, appears to have considerable support amongst his colleagues in the Senate. A similar provision to audit the Fed, the Sanders-Webb-Bunning-Feingold Amendment, won 59 votes in April 2009, and eight of the "No"s on that 2009 vote have signed onto Sanders' current amendment. And considering that the House passed a similar amendment last year, and that right now Sanders' amendment has the support of 69 senators, it looks as if the white-haired Vermont independent might get his Fed audit after all. The amendment could come up for a vote as early as today.

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Obama's "Most Wanted" Finance Loopholes

| Tue May 4, 2010 8:34 AM EDT

The White House is targeting ten of what it has dubbed the "Most Wanted" lobbyist loopholes in the ongoing financial regulatory reform fight. Essentially these are the items big lobbying organizations, like the US Chamber of Commerce and the Financial Services Roundtable, are pushing hardest on in order to blunt the effects of new reforms. Here are the highlight from the "Most Wanted" list, penned by White House communications guru Dan Pfeiffer.

  1. Ok, Consumer Protection Rules are Fine...Just Don't Enforce Them. Lobbyists are pushing hard to amend the bill so that Attorneys General lose their enforcement authority. Why does that matter? Because the Bureau would only supervise larger market participants. Without state AG enforcement authority, the citizens of their states will have much less protection against illegal conduct. If you want to weaken consumer protections, that's one way to do it.

  2. Letting Non-Banks Play by a Weaker Set of Rules. We know this is coming, so keep an eye out: attempts to give car dealers that make car loans and other major providers of financial services a big exemption from the consumer protection rules. Now be aware: some people try to scare small businesses by saying that the consumer financial protection bureau will regulate main street businesses like orthodontists and florists. That is not true. But if a car dealer makes loans, or if a big department store sets up a financial services center, it’s doing what banks and credit unions do, and it should play by the same rules.

  3. Preventing States from Protecting Their Own Citizens. Under the current bill, the Bureau of Consumer Financial Protection would set minimum standards for the consumer finance market, but states would still be allowed to adopt additional protections. In other words, federal consumer protections would set a floor, not a ceiling. There’s likely to be a fight about that provision. Citing the doctrine of “preemption,” big banks will try to take away states’ ability to supplement federal consumer protections. Why is this a problem? Because state officials are often the first to learn of new abuses and new problems in the marketplace, and we should not get rid of that canary in the coal mine. Federal law can overrule or “preempt” state law when a state law would significantly interfere with national banks’ business of banking, but states should otherwise have the right to protect their citizens as they see fit.

  4. Preserving “Too Big to Fail” While Pretending to Kill It. The key to preventing future bailouts is to end the problem of “Too Big to Fail.” And the only way to do that is to make sure that we can shut down big financial firms in a swift, orderly way if they’re on the brink of failure. Of course, not everyone wants to see “Too Big to Fail” disappear, since it lets the biggest firms borrow money at lower cost and avoid the consequences of excessive risk-taking. But no one wants to be caught defending the status quo. So defenders of the status quo are using a sleight of hand: pushing to make the resolution process so unwieldy that it can never work. By proposing amendments that look tough but that make the resolution process unworkable, opponents of reform will try to save “Too Big to Fail” while pretending to kill it.

These are all important points from Pfeiffer, and all provisions or rules still in play as the financial reform debate hits full stride this week. Some of them we've already covered here at MoJo, with our "Five Fights to Watch" a few weeks ago. This week, the deluge of amendments to the financial reform bill will begin, as will votes on those amendments. Some of those amendments will seek to bolster the bill, like Sen. Byron Dorgan's (D-ND) which would give a new financial oversight council the power to break up overly big banks. Other amendments, likely from the Republican camp, will seek to pare down the council's too-big-to-fail oversight power and the independence of the proposed consumer agency. All in all, it'll be a bruiser of a week on the path toward rewriting the rules of our financial system.

 

We're Still at War: Photo of the Day for May 4, 2010

Tue May 4, 2010 7:59 AM EDT

Sgt. Alex Pryzbylowski of Salem, Ore., and of 3rd Platoon, Apache Company, 1st Battalion, 23rd Infantry Regiment, 3rd Stryker Brigade Combat Team, 2nd Infantry Division, pictured right, points out something of interest to Sgt. Adam Beach, a native of Lake of Ozarks, Mo., also of 3rd Platoon, during Operation Apache Blanket in Mahudiya, Iraq, on April 23. Photo via the US Army.

BP's Slick Greenwashing

| Tue May 4, 2010 7:30 AM EDT

For the last decade, BP has been busily engaged in a multi-million-dollar greenwashing campaign. Changing its name from British Petroleum to BP, the company adopted a new slogan, “Beyond Petroleum,” and began a “rebranding” effort to depict itself as a public-spirited, environmentally sensitive, green energy enterprise, the very model of 21st century corporate responsibility.

It’s going to take more than a name change and a clever ad campaign to erase the image of oil spreading across the Gulf Coast from BP’s offshore rig, and dead wildlife washing up onto beaches. Even as the company magnanimously agreed to cover the costs of cleaning up the mammoth spill, BP on Monday was still insisting that it wasn’t at fault for the accident that caused it—instead blaming the offshore drilling contractor that operated the rig. So much for corporate accountability.

Before the Deepwater Horizon disaster, BP’s green image was nothing more than a scam. While making miniscule investments in things like solar power, biofuels, and carbon fuel cells that backed its PR claims, BP continued to work relentlessly to expand its oil and gas operations. In the last decade, as the world’s second largest producer of fossil fuels, the company drilled (and spilled) vast quantities of oil and gas on Alaska’s North Slope and in the North Sea. It positioned itself to rip up Canada’s tar sands to extract its dirty oil, and grabbed a 50 percent interest in Iraq’s rich Rumaila oil field. BP boasted the highest number of explosions and other accidents at its US refineries (several of them deadly), and made the Multinational Monitor’s 10 Worst Companies lists in 2000 and 2005, based on its environmental and human rights record.

BP clearly believed that green was in the eye of the beholder. The company’s move toward green marketing began in 1997, when it quit the industry’s climate change denial group, the Global Climate Coalition, and acknowledged a possible link between global warming and the use of fossil fuels. By 2000, the vertically integrated multinational—which explores, extracts, transports, refines, and sell fuels through its myriad gas stations–had bought up Amoco, Arco, and Burmah Castrol. It united them under the BP brand with a feel-good flowering sun logo, and hired the advertising firm of Ogilvy & Mathers to launch a $200 million rebranding campaign.

As Ogilvy executive John Seifert described it in 2002, then BP CEO John Browne—or, to use his full title, Lord Browne of Madingley–"came to me with a dream proposal. He said, 'I want this company to be a force for good in this world. Build that image and I will hold the company accountable to it.'" The problem, Seifert said, was, "No other industry is more loathed and distrusted by the public than the energy industry, and yet no other industry is more critical to modern survival. The reality is that no matter how much consumers resent energy companies, they still drive their cars and leave on the lights and turn the other cheek.” His solution was a campaign that "bridges the us/them barrier, that brings the consumer into the debate so that we can address the problem together."

'School of Shock' Intl. Complaint Filed

| Mon May 3, 2010 2:20 PM EDT

The Judge Rotenberg Center, a private school that uses electric shocks to punish its special needs students, has been on quite the roll since we profiled it in 2007. Just a few months ago, the Department of Justice opened a federal investigation into the school's unorthodox practices. Now, an international human rights organization has filed an "urgent appeal" with the United Nations Special Rapporteur on Torture. The group, Mental Disability Rights International, created a lengthy report called "Torture Not Treatment" that details the school's use of restraint boards, food deprivation, isolation, and electric shocks to keep its disabled and emotionally troubled students in line. "JRC is the only facility of any kind in the US—and perhaps the world—that uses electricity combined with long-term restraint and other punishments to intentionally cause pain to children with behavioral challenges and calls it treatment," said report author Laurie Ahern. To read the report in its entirety, click here (PDF).

Times Square Bomb: The Right's Nuttiest Theory

| Mon May 3, 2010 2:16 PM EDT

[Updated] This much we know: A US citizen born in Pakistan has been arrested for allegedly parking a Nissan Pathfinder in Times Square Saturday night, loaded with fertilizer that doesn't combust, a kid's alarm clock that likely didn't tick, several gallons of gas, some propane tanks, and a few M80 firecrackers. Attorney General Eric Holder has released a statement saying Shahzad was "taken into custody at JFK Airport in New York as he attempted to board a flight to Dubai." There's a lot we have yet to learn about what this news means, but it probably rules out one favorite conservative theory about the attempted bombing—that left-wing protesters took advantage of May Day (aka International Workers' Day) to make a big bang in New York's neon-soaked seat of capitalism. Even before the bomb was found, a blogger at Andrew Breitbart's Big Journalism blog unleashed a post titled: "Note To New York Times, MSNBC, WaPo and CNN: May Day Is Here and So Are the Actual Violent Protesters." (Your money quote: "Leftist May Day protesters are so cowardly, many of them wear masks during their rampages. Look for them in Los Angeles, as well as other major cities in America and Europe.") Another reminded his choir that environmentalists, not Tea Partiers, are the truly violent types.

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Harry Reid's Health Care Ads

| Mon May 3, 2010 11:23 AM EDT

Harry Reid, the Democrats' Senate Majority Leader, faces a tough reelection fight back in Nevada this fall. He's in big trouble in the polls—TPM's poll average has him trailing Sue Lowden, the likely GOP nominee, 52.6 percent to 38.3 percent. These are terrible numbers for an incumbent, and they mean Reid will probably lose. Nate Silver, the polling guru, gives the Republicans a nearly 80 percent chance of picking up the seat. All that said, it's not over 'til it's over. Reid has an immense war chest, and has threatened to spend as much as $25 million on the election. The Democrats will certainly pull out all the stops to save him. And now that health care reform has passed the House and the Senate and been signed into law, Reid has something big to run on. So (to borrow a Vegas-related phrase) he's going all-in, running ads that tie him explicitly to health care reform. They're actually pretty good:

Reid's clearly counting on the passage of health care reform to help him get through his toughest reelection battle yet. He's focusing on the aspects of reform that kick in right away—like the tax credits for small businesses that offer health insurance to their employees—and hoping people give him credit for making their lives a little bit easier. Expect to see a lot more messaging like this from Dems across the country as November draws near.

Red States Refuse to Insure High-Risk Patients

| Mon May 3, 2010 10:31 AM EDT

Though their campaign to repeal Obama’s Affordable Care Act has failed to gain much traction in Congress, Republican officials are already seizing upon ways to opt out of the new health law. At least 15 states—all but three led by Republicans—have decided against creating insurance pools for Americans with pre-existing conditions, forcing the federal government to step in and establish the high-risk pools itself. By contrast, at least 28 states—all but seven led by Democrats—will help the federal government by creating the pools themselves. It’s the first major decision for states to make under the new law. And the Republican-led refusals are the latest sign that red states will be far less willing to play nice as health reform gets underway.

In opting out of the high-risk pools, state officials criticized the federal government for not providing enough money to set up the program, claiming that states would end up being responsible for the shortfall. Texas Governor Rick Perry, for one, faulted the federal government for pushing "the aggressive implementation" and "the lack of assurances on financial solvency of the program." Such barbs echo other Republican-led attacks on the new health law, including the big expansion of Medicaid that states will help support—backed by a huge injection of federal money.

Poles Not Worried About Iranian Missiles

| Mon May 3, 2010 10:28 AM EDT

Polish Foreign Minister Radoslaw Sikorski spoke to Foreign Policy's Josh Rogin last week about his country's cooperation with American missile defense plans. The Bush administration's plans to put missile defenses in Poland was sold—as these things generally are—as a bulwark against missile launches by a rogue state (in this case, Iran.) As Rogin explains, this was all poppycock: the interceptors were designed to shoot down long-range missiles and would have had a lot of trouble shooting down anything launched by Tehran. And as it turns out, Sikorski isn't all that worried about the Islamic Republic nuking Warsaw. "If the mullahs have a target list we believe we are quite low on it," the foreign minister told Rogin. 

All this reminds me of Rep. Barney Frank's (D-Mass.) arguments against spending gobs of money on missile defense in Europe. Frank likes to talk about Prague, not Warsaw, but the analogy holds. "I will confess that I am not a regular reader of Iranian-issued fatwahs," Frank quipped last year. "And probably one of the ones I missed was the one where they threatened devastation against Prague. We plan to spend several billion dollars to protect the Czech Republic against Iran. That's either a great waste of money or a very belated way to make up for Munich." Is Sikorski thinking along the same lines?

BP Disaster a Case of Spilt Milk?

| Mon May 3, 2010 10:18 AM EDT

If you haven't heard of Mississippi congressman Gene Taylor (and odds are you haven't), then here's a doozy of a first impression: In an interview with a Biloxi television station, Taylor compared the massive oil spill in the Gulf of Mexico to a mere case of spilt chocolate milk. According to a transcript of the interview posted by ThinkProgress, Taylor downplayed the seriousness of the BP spill—which is releasing 210,000 gallons of crude oil daily into the gulf, according to the National Oceanic and Atmospheric Administration—saying, "This isn't Katrina. This is not Armageddon." Taylor goes on to say:

I did this for the Coast Guard many years ago. Yeah, it’s bad. And it’s terrible that there’s a spill out there. But I would remind people that the oil is twenty miles from any marsh...That chocolate milk looking spill starts breaking up in smaller pieces...It is tending to break up naturally.

Naturally, ThinkProgress points out, Taylor is a supporter of offshore oil drilling and voted against the House's comprehensive energy bill last year. He also counts the energy and natural resources industries among his top donors, according to the Center for Responsive Politics. While the extent of the spill is still elusive to government officials, who've had little success getting the leaking oil under control, a chocolate milk spill is hardly how they or the Gulf coast residents, soon to have their wetlands and beaches coated in oil, would characterize what the president himself has described as a national emergency.