Mortgaging the White House May 2, 2009Posted by rogerhollander in Economic Crisis.
Tags: bailout, bank bailout, banking barons, banksters, bill moyers, citigroup, congressional oversight, cop, economic advisor, Economic Crisis, fdr, Federal Reserve, finance industry, foreclosure, franklin delano roosevelt, geithner, great deression, gretchen morgenson, jo becker, laissez-faire, Larry Summers, michael winship, new york federal reserve, president obama, richard durbin, robert rubin, roger hollander, tarp, tarp bailout, taxpayer, treasury, Wall Street, white house
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Published on Saturday, May 2, 2009 by CommonDreams.org
In his first hundred days, FDR came out swinging. He shut down the banks, threw the money lenders from the temple, cranked out so much legislation so fast he would shout to his secretary, Grace Tully, “Grace, take a law!” Will Rogers said Congress didn’t pass bills anymore; it just waved as they went by.
President Obama’s been busy, but contrary to many of the pundits, he’s no FDR. Our new president got his political education in the world of Chicago ward politics, and seems to have adopted a strategy from the machine of that city’s longtime boss, the late Richard J. Daley, father of the current mayor there. “Don’t make no waves,” one of Daley’s henchmen used to advise, “don’t back no losers.”
Your opinion of Obama’s first 100 days depends of course on your own vantage point. But we’d argue that as part of his bending over backwards to support the banks and avoid the losers, he has blundered mightily in his choice of economic advisers.
Last week, at a hearing of the Congressional Oversight Panel (COP) monitoring the Troubled Asset Relief Program (TARP), Treasury Secretary Timothy Geithner tried to correct AFL-CIO General Counsel Damon Silvers. “I’ve practiced law and you’ve been a banker,” Silvers said. Never, Geithner replied, “I’ve only been in public service.”
We beg to differ. Read Jo Becker and Gretchen Morgenson’s front-page profile of Secretary Geithner in Monday’s New York Times, and you’ll see how Robert Rubin protégé Geithner, during the five years he was running the New York Federal Reserve, fell under the spell of the big barons of banking to whom he would one day help shovel overly generous sums of money at taxpayer expense.
During “an era of unbridled and ultimately disastrous risk-taking by the financial industry,” the Times reported, “… He forged unusually close relationships with executives of Wall Street’s giant financial institutions.
“His actions, as a regulator and later a bailout king, often aligned with the industry’s interests and desires, according to interviews with financiers, regulators and analysts and a review of Federal Reserve records.”
Wined and dined at the Four Seasons, and in corporate dining rooms and fine homes by the very men whose greed and judgment helped bring on the Great Collapse, Geithner became so much a favorite of the Club that former Citigroup chairman Sandy Weill talked with him about becoming the bank’s CEO.
According to Becker and Morgenson, “Even as banks complain that the government has attached too many intrusive strings to its financial assistance, a range of critics — lawmakers, economists and even former Federal Reserve colleagues — say that the bailout Mr. Geithner has played such a central role in fashioning is overly generous to the financial industry at taxpayer expense.”
The two reporters write that Geithner “repeatedly missed or overlooked signs” that the financial system was self-destructing. “When he did spot trouble, analysts say, his responses were too measured, or too late.”
In choosing a man to manage the bailout of the banks who’s so cozy with its players, and then installing as his White House economic adviser Larry Summers, who in the Clinton administration took a laissez-faire attitude toward the financial industry which would later enrich him, the president bought into the old fantasy that what’s best for Wall Street is best for America.
With these two as his financial gatekeepers, President Obama’s now in the position of Louis XVI being advised by Marie Antoinette to have another piece of cake until that rumble in the streets has passed on by.
In fact, other Wall Street insiders — many of them big contributors to the Obama presidential campaign, and progressive in their concern for the public interest — privately are expressing serious concerns that Geithner, Summers and their associates are leading the president and America’s taxpayers down a path toward further economic disaster.
This week, as Senate Majority Whip Richard Durbin of Illinois unsuccessfully fought for a congressional amendment he said would have helped 1.7 million Americans save their homes from foreclosure, the senator told a radio station back home that, “The banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.”
He could say the same of the White House.
In for a Penny, In for $2.98 Trillion April 1, 2009Posted by rogerhollander in Economic Crisis.
Tags: AIG, auto bailout, auto workers, auto workers pensions, bailout, bailout fraud, bernard madoff, chrysler, congressional oversight, deregulation, derivitives, Federal Reserve, geithner, general moters, gm, gm bankruptcy, lawrence summers, Obama, president clinton, Robert Scheer, roger hollander, taxpayers, treasury, Wall Street, white house advisors
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Posted on Mar 31, 2009, www.truthdig.com
|AP photo / Mary Altaffer|
The good news on the government’s “No Banker Left Behind” program is that according to the special inspector general’s report on Tuesday, the total handout to date is still less than 3 trillion dollars. It’s only 2.98 trillion to be precise, an amount six times greater than will be spent by federal, state and local governments this year on educating the 50 million American children in elementary and secondary schools.
The bad news is that even greater amounts of money are to be thrown down what has to be the world record for rat holes.
Where did the money go? Almost all of it went to the bankers and stockbrokers who got us into this mess by insisting that the complex-by-design derivatives they trafficked in should not be regulated by government since they were private transactions between consenting professionals. Sort of like a lap dance: If it doesn’t work out, that’s the problem of the parties involved and no concern of the government.
For the government to intervene would have created “legal uncertainty” in the derivatives market, an argument that a Republican-dominated Congress and President Clinton bought in authorizing the Commodity Futures Modernization Act in December of 2000. That law brought “legal certainty” to the market, a phrase that Lawrence Summers, then Clinton’s secretary of the treasury and now Barack Obama’s top White House economics adviser, deployed incessantly as a calming mantra as the financial derivatives market swirled out of control.
Now Summers and the other finance gurus who move so easily from Wall Street to Pennsylvania Avenue assure us that those professionals who made the toxic swap deals are too big to fail and must be entrusted with 3 trillion of our dollars to save themselves from disaster. And thanks to the laws they wrote, the bankers are likely to be covered for their socially destructive behavior by a get-out-of-jail-free card.
Well, maybe not all of them. A shudder must have run through the former Wall Street buddies of Bernie Madoff—once the highly respected chairman of the Nasdaq stock exchange—when Inspector General Neil Barofsky warned on Tuesday that “we are looking at the potential exposure of hundreds of billions of dollars in taxpayer money lost to fraud.”
How naive. The fraud no doubt has occurred and will occur again, but the exposure part is more questionable, if by that is meant bringing the criminals to account. As opposed to welfare cheats who end up imprisoned over scams that involve hundreds of dollars, these guys have brilliant lawyers who tell them how to steal legally when it comes to billions in fraud.
But most likely the white-collar criminals, if they are high enough up the food chain, will not even be quizzed about their activities. As the independent Congressional Oversight Panel has reported, there has been no serious accounting of the bailout money. It took major pressure from a Congress reacting to an outraged public to discover that AIG, in addition to handing out hundreds of millions in bonuses to the very hustlers who created the firm’s swindles, was a conduit for at least $70 billion in taxpayer money to reimburse the banks and stockbrokers who got us into this crisis with their bad bets.
No surprise there, given the incestuous world of finance, where the revolving doors between the Treasury Department, the Fed and executive offices in the industry have been swinging throughout both Republican and Democratic administrations. As a result, those orchestrating the bailout and those grabbing the money are for the most part friends and former colleagues, with enormous respect for each other but not for the American taxpayer and homeowner. Or for the autoworkers who had nothing to do with creating this problem but stand to lose their retiree health benefits and pensions if the Obama administration goes though with its threat to use bankruptcy to discharge GM and Chrysler from their obligations to their workers. Why float a company like AIG to the tune of $170 billion to keep that massive conglomerate from bankruptcy but balk at a much smaller commitment to keep GM solvent?
The money involved in the auto bailout is chump change compared with what Wall Street got, and it is far better spent. As opposed to the financial high rollers richly rewarded for crawling in and out of balance sheets, the folks who crawl in and out of cars along an assembly line are left with permanent aching backs and hard-won health care and retirement plans about to disappear through their company’s bankruptcy. Where’s their bonus package?
Who Will Rein in the War in Afghanistan? February 21, 2009Posted by rogerhollander in Iraq and Afghanistan, War.
Tags: afganistan, Afghanistan War, al-Qaeda, bin Laden, bush administration, civilian oversight, congress, congressional oversight, foreign affaris, foreign policy, foreign relations, hillary clinton, howare berman, john kerry, president obama, Robert Gates, roger hollander, senate, zp heller
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“We are asking here in Washington for some action, action from the Congress of the United States of America which has the power to raise and maintain armies, and which by the Constitution also has the power to declare war. We have come here, not to the President, because we believe that this body can be responsive to the will of the people, and we believe that the will of the people says that we should be out of Vietnam now.”
Those were the emotional words of a 27-year-old John Kerry, dressed in green fatigues, Silver Star, and Purple Heart ribbons as he shocked the country with his antiwar testimony before a crowded Senate Foreign Relations committee in 1971. Kerry’s fiery thirty-minute condemnation of the war became instantly legendary for questioning the reasons our military was in Vietnam; revealing the fact that the nation had turned its back on veterans; and slamming President Nixon for refusing to pull out.
It was a definitive moment for the antiwar movement made possible because chairman William Fulbright called Kerry to testify. Thirty-eight years later, Senator Kerry now sits in Fulbright’s seat. Along with Rep. Howard Berman, Chairman of the Foreign Affairs Committee, Kerry has the power to focus the national spotlight on a similar quagmire, the war in Afghanistan. And as the Obama administration just committed an additional 17,000 troops to Afghanistan at a cost of $775,000 per soldier every year, oversight hearings can’t come soon enough.
Congressional oversight has historically been essential to government accountability in wartime. It dates back to 1792, when the House used hearings to investigate the War Department for a military fiasco in Indian territory that left 600 soldiers dead. During the Civil War, a joint congressional committee forced the resignation of President Lincoln’s first Secretary of War by exposing corruption and mismanagement. In World War II, Senator Truman’s Committee to Investigate the National Defense Program held hundreds of hearings that eventually saved the country $15 billion (roughly $200 billion today). Senator Lyndon Johnson used oversight during the Korean War to question the efficiency and waste of military agencies. And the Fulbright Hearings were followed by decades of vigorous oversight hearings that included the Church committee investigations into CIA covert operations and intelligence gather, the joint committees that placed the Iran-contra affair under the microscope, and the hearings used to review US military operations in Kosovo.
In all of these instances, Congress upheld its responsibility to investigate military spending, expose scandal, hear expert testimony, and challenge policymakers and the implementation of foreign policy. And as The American Prospect’s Robert Kuttner noted, “the most effective oversight has been bipartisan, often with the President’s own party challenging his policies.” Of course, our country’s proud history of congressional oversight came crashing down during the majority of President Bush’s time in office. From 2000-2006, the administration largely eluded oversight, as Congress failed to confront the executive branch on the invasion of Afghanistan, the erroneous prewar intelligence that led us into Iraq, and the conduct of both wars, not to mention the torture of detainees and the administration’s reliance on mercenary contractors who have made hundreds of billions from these wars.
But the Bush administration’s years of blatant disregard for our legal system have ended. Though Congress remains deeply polarized, we have a Democratic majority in both houses, and an administration that presumably is more amenable to congressional oversight. It now falls to Congress to restore this system of checks and balances, and they can start by examining the policies and proposed military spending for Afghanistan, enlightening the American public about the true costs of a drawn-out war. As Andrew Bacevich, professor of International Relations and History at Boston University, told me, “The purpose of congressional oversight hearings ought to be an educational one. We’re not playing a game of ‘gotcha’ or trying to embarrass anyone. Congress should inform the public about the reality of policy, soliciting a wide variety of views in order to assemble as complete a picture as possible.”
Bacevich, a vocal critic of the war in Afghanistan, said it appeared President Obama put the cart before the horse, making his decision to send more troops without having completed the policy analysis various institutions have been working on. He remains skeptical that we will see oversight in Afghanistan, considering there has not been any institutionalized or concerted effort to monitor how the global war on terror–what Robert Gates has called the “Long War”–has been conducted and what it aims to achieve. That said, Bacevich agreed that if any one Senator could bring about oversight, it would be John Kerry.
Kerry is in the perfect position to call for hearings, not only because he chairs the Senate Foreign Relations committee, but also because he has nothing to lose in terms of political standing. Chances are he will not be President, nor will he serve as Secretary of State in the Obama administration. If Kerry wants to leave a lasting mark, it could be through hearings and investigations that rein in the Long War.
Recently, when Kerry compared Vietnam to Afghanistan during Hillary Clinton’s Secretary of State confirmation hearings, we saw a glimpse of that passionate 27 year old who once brought President Nixon and the nation to its knees:
“I am deeply concerned that, at least thus far, our policy in Afghanistan has kind of been on automatic.…Our original goal was to go in there and take on Al Qaeda. It was to capture or kill Osama bin Laden. It was not to adopt the 51st state of the United States. It was not to try to impose a form of government, no matter how much we believe in it and support it, but that is — that is the mission, at least, as it is being defined today.”
Now, if we could only urge Kerry to act boldly on that rhetoric, and, with his counterpart Berman in the House, let the hearings begin.