Sparsely Attended


SPARSELY ATTENDED….Virtually everyone agrees that one of the root causes of the financial system meltdown has been the vast increase in leverage at big financial firms over the past few years. It’s a problem that’s gotten increased attention since 1998 but one that nobody ever does much about.

In fact, it’s worse than that. As the New York Times reports today, four years ago the SEC voted to change the net capital rule for the biggest investment banks — not to decrease allowable leverage or even to make sure it stayed at statutory levels, but to increase it. Pay attention to the last sentence:

Decisions made at a brief meeting on April 28, 2004, explain why the problems could spin out of control….On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks. They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on.

….The proceeding was sparsely attended. None of the major media outlets, including The New York Times, covered it.

This is surprisingly typical of how things get done in Washington. In all sorts of areas, decisions that turn out to have enormous impact are made in sleepy little commission meetings or by executive order, with hearings attended only by a few die-hard lobbyists on both sides and — at least under the Bush administration — the final decision practically foreordained in favor of whatever the business community wants. Then, like a cherry on top of an ice cream sundae, the budget for oversight is either cut or eliminated because the business community insists that market discipline will take care of such things far better than a bunch of federal bureaucrats.

Turns out that doesn’t always work so well.

DOES IT FEEL LIKE POLITICS IS AT A BREAKING POINT?

Headshot of Editor in Chief of Mother Jones, Clara Jeffery

It sure feels that way to me, and here at Mother Jones, we’ve been thinking a lot about what journalism needs to do differently, and how we can have the biggest impact.

We kept coming back to one word: corruption. Democracy and the rule of law being undermined by those with wealth and power for their own gain. So we're launching an ambitious Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption, and asking the MoJo community to help crowdfund it.

We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We want to dig into the forces and decisions that have allowed massive conflicts of interest, influence peddling, and win-at-all-costs politics to flourish.

It's unlike anything we've done, and we have seed funding to get started, but we're looking to raise $500,000 from readers by July when we'll be making key budgeting decisions—and the more resources we have by then, the deeper we can dig. If our plan sounds good to you, please help kickstart it with a tax-deductible donation today.

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Signed by Clara Jeffery

Clara Jeffery, Editor-in-Chief

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