Tuesday, March 10, 2009

Brother Keith Explains It All

Keith references a report ("Sold Out: How Wall Street and Washington Betrayed America" [.pdf here, 3 MB]) by Los Angeles consumer advocate Harvey Rosenfield's group, Wall Street Watch.

"Sold Out" details a dozen key steps to financial meltdown, revealing how industry pressure led to these deregulatory moves and their consequences:
  1. In 1999, Congress repealed the Glass-Steagall Act, which had prohibited the merger of commercial banking and investment banking.
  2. Regulatory rules permitted off-balance sheet accounting -- tricks that enabled banks to hide their liabilities.
  3. The Clinton administration blocked the Commodity Futures Trading Commission from regulating financial derivatives -- which became the basis for massive speculation.
  4. Congress in 2000 prohibited regulation of financial derivatives when it passed the Commodity Futures Modernization Act.
  5. The Securities and Exchange Commission in 2004 adopted a voluntary regulation scheme for investment banks that enabled them to incur much higher levels of debt.
  6. Rules adopted by global regulators at the behest of the financial industry would enable commercial banks to determine their own capital reserve requirements, based on their internal "risk-assessment models."
  7. Federal regulators refused to block widespread predatory lending practices earlier in this decade, failing to either issue appropriate regulations or even enforce existing ones.
  8. Federal bank regulators claimed the power to supersede state consumer protection laws that could have diminished predatory lending and other abusive practices.
  9. Federal rules prevent victims of abusive loans from suing firms that bought their loans from the banks that issued the original loan.
  10. Fannie Mae and Freddie Mac expanded beyond their traditional scope of business and entered the subprime market, ultimately costing taxpayers hundreds of billions of dollars.
  11. The abandonment of antitrust and related regulatory principles enabled the creation of too-big-to-fail megabanks, which engaged in much riskier practices than smaller banks.
  12. Beset by conflicts of interest, private credit rating companies incorrectly assessed the quality of mortgage-backed securities; a 2006 law handcuffed the SEC from properly regulating the firms.

Financial Sector Political Money and 3000 Lobbyists Dictated Washington Policy

During the period 1998-2008:
  • Commercial banks spent more than $154 million on campaign contributions, while investing $363 million in officially registered lobbying:
  • Accounting firms spent $68 million on campaign contributions and $115 million on lobbying;
  • Insurance companies donated more than $218 million and spent more than $1.1 billion on lobbying;
  • Securities firms invested more than $504 million in campaign contributions, and an additional $576 million in lobbying. Included in this total: private equity firms contributed $56 million to federal candidates and spent $33 million on lobbying; and hedge funds spent $32 million on campaign contributions (about half in the 2008 election cycle).
  • The betrayal was bipartisan: about 55 percent of the political donations went to Republicans and 45 percent to Democrats, primarily reflecting the balance of power over the decade. Democrats took just more than half of the financial sector's 2008 election cycle contributions.
  • The financial sector buttressed its political strength by placing Wall Street expatriates in top regulatory positions, including the post of Treasury Secretary held by two former Goldman Sachs chairs, Robert Rubin and Henry Paulson.
  • Financial firms employed a legion of lobbyists, maintaining nearly 3,000 separate lobbyists in 2007 alone.
  • These companies drew heavily from government in choosing their lobbyists. Surveying 20 leading financial firms, "Sold Out" finds 142 of the lobbyists they employed from 1998-2008 were previously high-ranking officials or employees in the Executive Branch or Congress.

What's the solution?

1 comment:

Anonymous said...

End lobbying by "for-profit" entities, and change election financing rules and we could get control of our government again.

The way things are now, we will keep riding the merry-go-round of bust-boom.

We have all been told about how wonderful the new digital revolution in television is going to be and we have heard about all the wonderful NEW channels we will all get, so why not this scenario?:


Every state gets two new channels -- One for Democratic politics and one for Republican politics. And we get two national channels of the same.

ALL politics would be relegated to those channels, and every politician would get free air-time on them. And NO commercials by politicians would be allowed on any other channel.


So we would have an election where politicians would not NEED to have 38 million dollars to run for a 2 yr job that pays a total income of less than $250K.

We would also have representatives/senators who were not beholden to lobbyists who were stuffing money into their pockets for "favors". Anyone who DID accept money (or any compensation) from a lobbyist would be breaking the law, and terminated immediately.

CORPORATIONS ALREADY LOBBY US ALL, every time we buy their products, every time we see their commercials.

The only "need" for campaign money could easily come from internet participation (as evidenced by the way dean and Obama raised money in small increments from millions of people). There should be a LIMIT of $100 per donation, with an upper limit of $1k per person, per cycle. If you cannot drum up enough support to pay a staff and buy signs & mailings, then maybe you don't have enough good ideas to inspire enough people to deserve to win.


Limit government participation to :

2 consecutive 6 year terms for any senator
2 consecutive 4 year terms for any congressperson.



The only way to get a pension is to serve 2 consecutive terms in each body of congress.

Serve your country and then GO HOME!! (like the founding fathers intended)


Expand the senate to 3 per state

Expand the house to 1 congressperson per 200K people in the state

Re-draw ALL congressional districts on rational dividing lines (we have computers that can easily do this, maybe by zip-code).


Make voting an "opt-OUT" system, instead of an "opt-IN". Every citizen is automatically registered to vote at age 18.

Voter registration should be NON partisan. Parties would be like "clubs", that voters could choose to "join", but the voting records would be secret.

When a primary happens, all that's needed is to choose which ballot you want. You only get one (R or D), but no notation of what party YOU are, should be included in the official records.

A national voter ID card should be issued to everyone on their 16th birthday, and just proof of address (for voting in local elections ) would be all that was necessary. Convenience stores can swipe your debit card easily, so why couldn't polling places do the same. That would register the fact that that particular voter has voted, and since they signed in too, it could easily be verified.

Elections would be broken into TWO distinct ballots:
1) Nationally held offices (senate/congress/president)
2) Local/state offices/issues

Standardized paper cardstock ballots with a sharpie pen, and real live people to count those votes IN PLACE at the end of the day, and CCTV video of the whole process is all that's needed.

Local/state ballots could be done any way the state/county/city wants them to be.

We got where we are now, by lobbyists funding legislators, in exchange for "sweet deals" to those lobbyists & their clients.

When we refused to take control of our elections, we assured that some "wrong" people make it to DC, and occupied seats of power that allowed them to create laws that never should have been. One or two "wrong" senators led to a majority that obstructed investigations that might have mitigated the troubles we are in now.

And the collegial "covering" that senators like Lieberman, and other "bi-partisan" democrats do, adds to the nonsensical legislation that allows massive fraud to take place.

When ONE democrat takes money from a lobbyist, they are complicit when frauds occur. Even if 99% of the smelly deals are perpetrated by Republicans, that 1% will be ballyhooed by the press with equal alacrity.

Lobbying is not ALL bad; just the lobbying by corporate entities and organizations who are profit-driven. If their product/business plan is not strong enough to stand-alone, they do not deserve to stay in business. Laws should be about protecting ALL of us, not the few corporations/richest of us whose only reason to exist is to make money at any cost to the public.