We are here (#OccupyWallStreet)

Apologies for the extended radio silence (almost a full year since the last post, in fact.)  Blame finishing up graduate school, getting married this summer, and starting a new job recently.  All wonderful, joyous life-events; I am blessed.

So what’s changed in our world since November 2, 2010?  Anything much?

h/t Mike Konczal

Chances are you may have heard about the Occupy Wall Street protests currently going on in New York.  At the risk of opening myself to later ridicule if suddenly the occupation falls apart and nothing more comes of it, I believe that these protests happening all over the country are the start of something new (and yet quite certainly old) in our political/social/economic discourse.  The Occupation is, in the very broadest sense of the term, a great showing of people power. 

What have these protesters done?  They have reclaimed, at least in miniature, a part of the commons: those public spaces that are free and open for all to use.  They have reclaimed Zuccotti Park (renamed Liberty Park by the occupiers) and are holding it, occupying it by the simple act of gathering together en masse, in an ad hoc community of equals.  In the midst of the most powerful globalizing force in this world, the colossus that bestrides the world through its use and abuse of capital in pursuit of more capital, Wall Street, the occupiers have recreated a locality, a community of human persons, rather than corporate persons.  The physical act of being is, perhaps, the means and the end of their protest; the thumb in the eye of those who would subjugate others to modern debt peonage by a systematic deindustrialization, de-unionization, debasement of those who were at one point hopeful and perhaps even comfortable in their lives. 

h/t JW Mason

This protest, the fact that people from all walks of life feel that the most effective method of expressing their outrage is a purposely undefined and undirected occupation of a public space, reflects the profound disillusionment in and failure of institutions in our society.  Business, government, the media, various levels of education, healthcare…somehow all of these institutions have conspired to make Americans’ lives collectively far worse than they have been at any time in recent memory. 

For some elucidation of this point, at least in part, witness the media’s sudden interest in Occupy Wall Street, despite the ostensible lack of media savviness in the occupiers’ ranks.  Much of the media coverage has focused on the lack of a coherent message from the occupiers, or attempts to fit OWS into accepted “protest paradigms;” witness this sad example of both at once:

A question was asked of me yesterday about the Occupy Wall Street movement that has been a presence in lower Manhattan since Sept. 17. Are there any parallels between it and the Tea Party movement? Yes. But if it doesn’t do four things — 1.) broaden its base of support to include those who share its values or goals; 2.) get specific about what the goals are; 3.) bring the protests to Washington; and 4.) get support from members of Congress — it could squander its momentum.

I have problems with all four of the author’s points he makes, but I’d like to draw out what I see as the overall tone of this response – bring it to Washington or it doesn’t exist.  Present the powers-that-be with a specific set of legislative goals you’d like to achieve and let them VOTE on them; that’s how you define and achieve success.

This movement does not fit into the left-right paradigm that is necessary for the media to comprehend it, except to the extent that in many of the occupiers’ state opinions, re-establishing some semblance of justice in this country tends to require what are considered “liberal” policy responses.  BOTH parties in this country are bought off by the money machine, enabled by our Supreme arbiters of justice, for whom speech and money are equivalent in the political sphere (thus ensuring that those with more money by definition have more “speech”).  Washington is a morass of corruption, legalized.  When politicians say that Washington is “broken,” they simply mean that their political donors are not able to extract as much legislated wealth as before due to the gridlock that is currently wracking our nation’s political process.  What OWS is saying with their physical presence is that yes, Washington is broken, and it’s time to clean house and re-establish the norms so that they work for all, not just those at the top.  The failure is bipartisan in nature:

Occupy Wall Street and its spin-offs have found little support so far among Democrats, outside of a few lawmakers on the left of the party.
“The message of Occupy Wall Street is we think both political parties are owned by the same guys,” said David Graeber, a former professor of anthropology at Yale who joined in the protests. “If democracy is to mean anything, it means that everybody has to weigh in on this process of how money is created and promises are renegotiated.”

Democratic politicians don’t want to upset their precious campaign donors, so they stay studiously away from the most authentic outpouring of the populism that their party claims to represent in years.  That fact exemplifies the outsized role of money in our politics – if you hew to the party line, you get campaign bucks; if you deviate, we take it away and give it to your opponent, simple as that.

What will this Occupation come to in the end?  Who knows?  I am thankful it is occurring though, and I will have more to say about this topic in coming days.  Where do you stand?  Support or oppose?

Max's November 2 California Voting Suggestions

In a few prior elections I’ve provided relatively informal election guides to my friends and family as a small service to those who may not follow the news, and particularly politics, as closely as I do.  Given that these midterm elections on November 2 are shaping up to provide a veritable cornucopia of answers to some of the fascinating open questions bouncing around in our nation’s collective consciousness (Can crazy Tea Partier candidates really win contested seats?  Will the first-time voters that Obama brought out in 2008 return to the polls this year?  Will a 7-1 Republican advantage in spending by third-party groups, fueled by the Supreme Court’s heinous Citizens United ruling dramatically shape the election outcome?  Will Texas oil companies and Koch Industries roll back California’s progress on building a clean energy economy?  Will pot be legal?)

To me, the overarching question facing our nation is whether we will meet the collective challenges we face with courage and a willingness to continue to trod towards the new direction President Obama has outlined for us, or whether we will return to the policies of the previous administration.  Make no doubt about it, this election is about fear versus courage, and the forces that benefit from the continued economic, social, and health-related misery of Americans have been working nonstop to stimulate that fear in our country.  It is about standing up and facing the challenges put before us (climate change, an economic recovery without jobs, ongoing fraud at the highest levels of our financial and banking sectors, resource scarcity, increasing foreign economic competitiveness, etc.) with a clear understanding that setting ourselves up for long-term gains and prosperity may require some short-term sacrifices. 

Okay, so on with the candidates and ballot propositions, with the propositions’ ballot language quoted in the text below:

Ballot Propositions

Prop 19 – Legalizes marijuana under California law but not federal law.  Permits local governments to regulate and tax commercial production, distribution, and sale of marijuana.  YES

This was a tough one for me, because while I’m not wholeheartedly in favor of legalization, as I believe there could be unintended consequences, and I don’t use the stuff personally, so I won’t be directly affected, but nevertheless, there are three reasons I’ll vote for Prop 19.  1) A vote against the “War on Drugs” that has been a massive failure at the federal level; 2) Potential extra tax revenue for the state – whether it’ll really be $2 billion as proponents have claimed is doubtful due to simple supply and demand issues (if there’s more pot available on the market and buyers no longer have to pay a premium to compensate their suppliers for the risks they run, prices will go down) however anything helps California’s budget at this point; 3) A vote against the “incarceration-first, maybe-rehab-later if we have the budget for it” mentality that reigns in this country – once we can treat addictions as the diseases they are, rather than as simple crimes, I believe that will lead towards a far more humane crime control policy.

Prop 20 – Redistricting of Congressional Districts.  Initiative Constitutional Amendment.  YES

Another tough vote, as the political support and opposition to this particular initiative is a by-product of California’s Democratic-heavy political leanings.  In 2008, California voters passed Proposition 11, which instituted a Citizens Redistricting Commission, taking the power to draw the lines of state Assembly and Senate districts out of the hands of the legislators themselves and placing it in the Citizens Commission.  Prop 20 would extend the power of the Citizens Commission to redraw the lines for federal Congressional districts as well – something the Democrats in the state are wholly opposed to, due to the fact that, with non-gerrymandered districts, Democratic seats could be put at risk.  As a Democrat, I’m obviously not terribly interested in seeing Democrats lose seats in Congress; but as a citizen, I believe that we need to force politicians to actually fight for their seats, not just win by virtue of the proportion of registered Democrats to registered Republicans in their districts.  This is an anti-incumbent protection act, and therefore, I wholeheartedly urge a YES vote.  For more on the Proposition 20 opposition’s fairly anti-democratic campaign, see this article from LA Weekly.

Prop 21 – Established $18 annual vehicle license surcharge to help fund state parks and wildlife programs.  Grants surcharged vehicles free admission to all state parks.  Initiative statute.  YES

This one’s fairly straightforward – if we want to have the state supply services, we have to pay for them, plain and simple.  Gov. Schwarzenegger had to cut a lot for our budget to pass this year, and a YES vote on this proposition would help restore some needed services, including state parks.

Prop 22 – Prohibits the state from borrowing or taking funds used for transportation, redevelopment, or local government projects and services.  Initiative Constitutional Amendment.  NO

This is another tough one.  I strongly disagree with the State government swooping in and taking funds that are earmarked for local governments and using them on State priorities, however, I also am opposed to placing more budgetary restrictions on the State government.  The amount of discretionary budget that the State has authority over has shrunken over the years, and I’m afraid that placing more restrictions could have far-reaching implications.  I support local governments wholeheartedly, but sadly, on this one I have to recommend NO.

Prop 23 – Suspends implementation of Air Pollution Control Law (AB32) requiring major sources of emissions to report and reduce greenhouse gas emissions that cause global warming, until unemployment drops to 5.5% or less for full year.  Initiative statute.  NO

This is the one proposition I”m most concerned about, and I strongly STRONGLY urge a NO vote on it.  The Texas oil companies claim that stopping AB32 would create jobs, when the fact is, oil is a dying industry, particularly in California, where most of the oil has been extracted already.  If our economy is going to grow stronger, we need to ensure that we’re investing in new and innovative technologies, as that’s where the job growth is going to come from.  The LA Times ran an article today that essentially comes down to Valero (the primary oil refiner funding Prop 23) attempting to extort Californians for money: “But whatever the cost [of the regulations], [CEO] Klesse said, "it will all be passed through to the consumer. The companies aren't going to able to absorb this or they're going to go out of business."”  Of course, after being asked what happens if Prop 23 gets defeated, Klesse relents a bit: "We'll let the voters vote," he said."We're in business in California and it'll just continue. And we'll see what the actual regs look like, and then we'll take actions around them."

Let’s vote to stop the oil monopoly over our transportation sector – the oil companies couldn’t threaten us with such economic harm if our energy portfolio were diversified.  Let’s vote to send a message.  NO on 23.

Prop 24 – Repeals recent legislation that would allow businesses to lower their tax liability.  Initiative statute.  YES

Our state needs revenue, and everyone’s got to pay their fair share – yes, even businesses.  California’s already seen as an anti-business state, is this going to be the straw that breaks the camel’s back for a lot of business owners?  Unlikely.

Prop 25 -  Changes legislative vote requirement to pass budget and budget-related legislation from two-thirds to a simple majority.  Retains two-thirds vote requirement for taxes.  Initiative constitutional amendment.  YES

It’s time to be done with the 2/3 majority for passing the state budget each year.  The process enables the Republican minority in the state Legislature to wield outsize influence in budget negotiations, which leads to individual lawmakers sneaking pet projects in as bargaining chips, and a generally wasteful process.  This proposition should have been on the ballot many years ago, but things are at a point now where it’s long past time to get rid of the special-interest welfare that is the 2/3 budget majority.

Prop 26 – Requires that certain state and local fees be approved by two-thirds vote.  Fees include those that address adverse impacts on society or the environment cause by the fee-payer’s business.  Initiative constitutional amendment.  NO

Reread that proposition again...”Fees include those that address adverse impacts on society or the environment cause by the fee-payer’s business.”  See, this is a backdoor way for big polluters and/or other businesses that may pollute to make it harder for communities that are affected by their pollution to charge them for it.  This reduces the autonomy of local governments and is a way for polluters to sneak in a way to not have to pay for their messes – the way BP was poised to do until President Obama intervened. 

Prop 27 – Eliminates state commission on redistricting.  Consolidates authority for redistricting with elected representatives.  Initiative constitutional amendment and statute.  NO

This is the evil twin of Proposition 20, plain and simple.  This is a ballot measure that was put on the ballot by the folks who have been gerrymandering California political districts for years (see the above LA Weekly article for more) and it is a direct effort by the federal Congressional delegation to wrest power from the hands of the Citizens Redistricting Commission, so they can continue to protect themselves from having to face real competition.  I may be a Democrat, but corruption is corruption.  Definitely vote NO on this one. 

 

Statewide Candidates

Okay, small disclaimer here: I follow politics pretty closely, but I will admit that when it comes to a lot of these candidates, I honestly don’t really know too much about them.  Rather than make statements about candidates, I just say to vote what your conscience tells you.  Below I’ll just run over my reasons for voting for the few statewide races I really DO know something about (and for expediency’s sake, I’ll only do the major-party candidates, so sorry third-partiers, I support your efforts, I really do!)

 

US Senate – Senator Barbara Boxer (D) vs. Carly Fiorina (R)

My Recommendation: Vote Boxer

Here’s the matchup: a longtime liberal California politician against a successful corporate CEO from Silicon Valley.  In this “anti-incumbent” mood the media keeps telling us our country is in, one would expect Californians to go for the businesswoman, right?

Now, what if I told you that that businesswoman had outsourced thousands of jobs while she was CEO of Hewlett-Packard?  Boxer hit this note with what I think is one of the most effective ads that I’ve seen in this LONG campaign season:

What happened to all of those workers laid off due to the merger of HP and Compaq, and those other workers laid off because Fiorina outsourced their jobs?  Well it’s certainly conceivable that they ended up on state unemployment rolls – it’s easy to claim you’re a “fiscal conservative” when you have the state to cover for the destruction you leave in your wake…Fiorina has that attitude in common with Wall Street: privatize the profits, socialize the losses.  And she’s a patriot how exactly?

Boxer, on the other hand, is the Chairwoman of the Senate Environment and Public Works Committee, a position that gives her a major hand in shaping our country’s environmental priorities.  She is an avid supporter of a woman’s right to choose and for promoting the common good more generally.  I’ll be proud to vote for Boxer tomorrow. 

Governor – Attorney General Jerry Brown (D) vs. Meg Whitman (R)

My Recommendation: Vote Brown

This is Jerry Brown’s second go-round attempt as California Governor (he was Governor before California voters imposed term limits, so he can try again legally) and I strongly believe he’s a great choice for Governor.  Brown is off-the-cuff, a relatively fiscally conservative Democrat, and he also pioneered some visionary environmental policies in his time as Governor in the 1970s.  As he’s said recently, he’s old, and he’s not running for Governor as a stepping-stone to another office, but as an end unto itself.  This fact in and of itself gives me hope that he’ll be bold in his actions (as he doesn’t need to worry about future voters looking askance at his unorthodox approach to governing) and yet he’ll have the best interests of Californians in mind (again, not running for another office means he doesn’t need to please campaign donors, so he may well upset both the unions and the corporations). 

Beyond all of that, though, Meg Whitman would be a disaster for California.  Why is this woman running for office?  What does she want?  Who the heck is she really?  After spending $140 million of her own money on this campaign, Californians don’t really have any answers to those questions, and that speaks to a fundamental problem with Meg Whitman herself.  Some commentators have said that she hasn’t “connected” with voters, but I think there’s a simple lack of trust from voters, since it’s unclear what she’s even running for – many have suggested that she just wants to give herself and her rich friends a massive tax break by eliminating the California state capital gains tax (estimated at between $8 million and $40 million for eMeg) and it appears she didn’t bother to vote for 28 years of her life.  She’s flip-flopped all over the place in her policies from the Republican primary against Steve Poizner to the general election against Jerry Brown – after winning the Republican nomination, coming out claiming that she’s not that different from Brown on illegal immigration, but after it was revealed that her housekeeper of 9 years (whom she called a “part of the family”) to now last week claiming the maid, Nicky Diaz Santillan, should be deported.  I guess “family” ends when the political going gets rough, eh? 

So enough about this nastiness.  Meg Whitman is just not what this state needs right now, and Jerry Brown, while surely flawed, at least has a sense of public duty after all these years of service, and appears to have the right intentions in his heart.

Lieutenant Governor – Gavin Newsom (D) vs. Abel Maldonado (R)

My Recommendation: Vote Newsom

Secretary of State – Debra Bowen (D) vs. Damon Dunn (R)

My Recommendation: Vote Bowen

Debra Bowen has done some great things as Secretary of State, including attempting to revamp the state’s voting system and implement long-overdue reforms.  This may seem like a random office, but it’s incredibly important for the preservation of democracy and the security of our votes.

 

Controller – Controller John Chiang (D) vs. Tony Strickland (R)

My Recommendation: Vote Chiang

Chiang has shown some surprising backbone in fighting Schwarzenegger’s draconian cuts the past few years, and I think he’s got a good thing going.

 

For Treasurer, Attorney General and Insurance Commissioner, I really can’t say that I know enough about the candidates or their histories to make a strong recommendation either way.  Plus, this posting is getting way too long, and it’s late.  I don’t know if anyone will even bother to read this, but oh well, I wanted to at least get something out there for those who happen across this blog.

Vote well, all.

Foreclosure fraud mess continued

Collusion between the government and the financial sector to cover up the perilous state of the banks’ balance sheets has been a running theme in the current economic crisis.  As I mentioned in my previous posting on the foreclosure fraud mess, it appears that the scale and scope of systemic fraud that has been uncovered by the foreclosure fraud scandal may simply be too great and widespread to be papered over any longer.  In one of the most revealing news segments I’ve seen in a while, MSNBC’s Dylan Ratigan spoke with blogger Lisa Epstein and savings-and-loan scandal regulator William K. Black this afternoon, and Black gave a rather detailed and fiery explanation of what’s going on these days.  The video is well worth watching through to the end:

Fantastic, do watch if you have the time.

The foreclosure fraud mess – a day of reckoning at last?

The foreclosure fraud case is one of the BIG stories I’ve been trying my best to follow lately.  We learned today that all 50 state Attorneys General have opened an investigation into mortgage industry practices:

The state attorneys general are looking at allegations some banks did not properly review files or submitted false statements to evict delinquent borrowers from their homes during a foreclosure crisis that is one of the most visible wounds of the 2007-2009 recession.

"We are in the fourth year of a housing and economic crisis that was brought on by lax practices of the mortgage lending industry," Minnesota Attorney General Lori Swanson said in a statement.

"The latest allegations of corner-cutting and slipshod paperwork are troubling, but perhaps not surprising."

--

The states are investigating the use of "robo-signers" -- people who sign hundreds of affidavits a day -- by banks and companies that collect monthly mortgage payments. It is alleged they did not properly review the documents they were signing.

"What we have seen are not mere technicalities, as some suggest," Ohio Attorney General Richard Cordray said.

So if there was systematic fraud perpetrated throughout the mortgage lending industry, one would hope we’d finally see some of these scoundrels locked up for awhile. 

Incidentally, one of the last times that all 50 state Attorneys General agreed to pursue a coordinated investigation, guess what the alleged crime was?  Predatory lending.  And guess who took the lead in making the public case for the investigation – then-Governor of New York Eliot Spitzer.  Spitzer came out swinging against the mortgage lending industry and the banks at large in a February 14, 2008 Washington Post piece that is worth excerpting from at length (but well worth a read in its entirety):

Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive "teaser" rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.

Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers.

--

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules. (emphasis mine)

The Bush Administration intervened to stop the states from investigating and enforcing their own predatory lending laws, which I think just might qualify as an egregious breach of the sacredness of “states’ rights” in GOP doctrine, eh?

But as we all now know, hubris brought Spitzer’s gubernatorial reign down (but he’s not out, have you seen him on CNN recently?) with the high-priced call girl scandal he was ensnared in just a few weeks after he wrote his Valentine’s Day article.  Let me make a quick aside at this point and say in no uncertain terms that I am not arguing that what Spitzer did was by any means acceptable.  Now, that being said, could there be any coincidence between his article broadcasting the Bush Administration’s outrageous actions on behalf of predatory lenders and his being outed as a john?  Let’s look a bit further:

Spitzer's fall was all the more stunning because he had been elected in November 2006 with 69 percent of the vote, the most ever in a New York gubernatorial race, and some Democrats even said he could possibly become the country's first Jewish president.

But his life and career began unraveling last week, when federal agents, acting on wiretaps, busted a high-class New Jersey-based prostitution ring, called Emperors Club VIP, and arrested four people. The criminal complaint listed an anonymous "Client 9," who was heard calling the escort service to arrange for a call girl named "Kristen" to meet him for a Feb. 13 tryst at Washington's Mayflower Hotel.

The client allegedly paid for the woman's train fare from New York to Washington and $4,300 for a two-hour session. Law enforcement sources confirmed this week that Client 9 was Spitzer.

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There are also questions about the identities of the other wealthy clients of the Emperors Club VIP. The criminal complaint unsealed last week made reference to 10 clients without naming them; only Spitzer has been identified as Client 9. (all emphases mine)

Interesting that Spitzer was the only client whose name was leaked identified to the press, especially because he was later cleared of all charges:

The details of Mr. Spitzer’s financial transactions — how he took money from his personal accounts and sent it to the prostitution ring’s front company, QAT International — were always the crucial questions in the case. Prosecutors, from the start, were trying to determine whether there was ample evidence to charge Mr. Spitzer with a crime called structuring, which makes it illegal to conduct financial transactions in a way intended to conceal their source and purpose.

Michael Horowitz, another former chief of the public corruption unit in Manhattan, said that it was rare for prosecutors to pursue a structuring charge without a substantive underlying crime like money laundering or drug trafficking. He suggested that a prostitution case, which the government was unlikely to prosecute anyway, was not enough to undergird a structuring charge. (emphasis mine)

So the government knew that Spitzer’s crimes were not going to lead him to prison, and yet it is uncommon for sitting politicians involved in sex scandals to be forced out of office, look at South Carolina Governor Mark Sanford, US Senator from Nevada John Ensign, and US Senator from Louisiana David Vitter (who was also caught in a prostitution scandal – the DC Madam case).  None of them were forced out of their jobs; do the rules bend when Republicans are involved, or was Spitzer more the exception to the rule in being forced out?  And why does it appear that some people in high places decided to drop the axe on Spitzer to muzzle him just after he publicly charged that the Bush Administration aided and abetted predatory lenders?

That line of questioning leads us back to the now-unfolding foreclosure fraud situation, explained in great detail here by Mike Konczal of the Roosevelt Institute.  The banks, as we all are well aware, benefited from a massive infusion of taxpayer largess in the form of the bailout (TARP) of October 2008 (remember it was Bush’s bailout folks, no matter what the Tea Party may wrongly claim) and that the bailouts served to rehabilitate a good chunk of the banks’ balance sheets.  But the banks still were forced to contend with the problem of widespread despair in the housing markets, and with the fact that many of the houses that they owned were, in fact, overvalued assets due to the nationwide plunge in home values. 

Because the banks have gotten “too-big-to-fail” (which is what necessitated the bailouts in the first place) as I’ve discussed in a previous posting at length, the government has continued to help prop the banks up, lest the entire financial apparatus collapse entirely.  Programs such as the Home Affordable Modification Program (HAMP) that are ostensibly designed to incentivize banks to help homeowners renegotiate their mortgages on more favorable terms, have been shown to serve the banks’ interests entirely.  From a report by Steve Waldman on a meeting Geithner and other top Treasury officials had with financial bloggers over the summer:

The conversation next turned to housing and HAMP. On HAMP, officials were surprisingly candid. The program has gotten a lot of bad press in terms of its Kafka-esque qualification process and its limited success in generating mortgage modifications under which families become able and willing to pay their debt. Officials pointed out that what may have been an agonizing process for individuals was a useful palliative for the system as a whole. Even if most HAMP applicants ultimately default, the program prevented an outbreak of foreclosures exactly when the system could have handled it least. There were murmurs among the bloggers of “extend and pretend”, but I don’t think that’s quite right. This was extend-and-don’t-even-bother-to-pretend. The program was successful in the sense that it kept the patient alive until it had begun to heal. And the patient of this metaphor was not a struggling homeowner, but the financial system, a.k.a. the banks. Policymakers openly judged HAMP to be a qualified success because it helped banks muddle through what might have been a fatal shock. I believe these policymakers conflate, in full sincerity, incumbent financial institutions with “the system”, “the economy”, and “ordinary Americans”. Treasury officials are not cruel people. I’m sure they would have preferred if the program had worked out better for homeowners as well. But they have larger concerns, and from their perspective, HAMP has helped to address those. (all emphases mine)

There you go, policymakers playing kabuki with taxpayers in order to help keep the banks who got us into this mess alive…what a grotesque situation!

And yet, after all of this has happened, some are saying, like former financial executive RJ Eskow, that the foreclosure fraud scandal may just show that the emperor (the banks in this case) has no clothes:

The foreclosure fraud scandal is a big deal (or a big "effin'" deal, as Joe Biden might say). But its real significance is an even bigger deal. Foreclosure fraud is one domino, and if it falls others will follow. The result could be an end to the "invisible bailout" -- the one you never hear about, the one that forces millions of people to subsidize bad lending practices in order to prop up Wall Street.

The invisible bailout is the reason why the government isn't pushing to freeze foreclosures. If the foreclosure process is halted and lending practices are thoroughly investigated, it might eventually force bankers to own up to their own lawlessness -- and write down billions of dollars in artificially inflated assets. How are they going to pay themselves record bonuses if that happens?

This is where it gets really ugly – our somewhat/perhaps/maybe/kinda recovering economy could well be plunged into another, perhaps deeper financial downturn if widespread fraud is in fact found among the banks’ mortgages.  If nobody knows who rightfully holds the title to a home, how could they possibly know its market value?  The entire financial system has been rebuilt (if one could even call it that) after the 2008 financial crisis on a foundation of nearly worthless and potentially fraudulent mortgages, and “irresponsible homeowners” have been to blame for not only their own troubles, but those of the entire financial system.  Eskow continues:

Nobel prizewinner Joseph Stiglitz, who also bears the distinction of having been correct about the housing bubble, thinks it's time for the banks to write down the excess value of these loans. As Stiglitz observes, that will be painful for the banks in the short term, although it would be "nothing in comparison to the suffering they have inflicted on people throughout the rest of the global economy."

But the administration's reluctant to do that. That's why we heard such tepid remarks from the White House about the foreclosure fraud scandal over the weekend. If the foreclosure fraud issue is pursued too aggressively, it throws 41% of all expected housing sales into question. It raises even more questions about the ownership of millions of loans in good standing, potentially giving homeowners leverage to renegotiate based on the actual market value of their homes. And it reopens the issue of "writedowns."

Illegal submission of foreclosure documents was part of a larger cover-up. People need to be arrested for it -- but that, of course, would open up a larger can of worms. The legal process could very well reveal the extent of the title problem, as well as other potentially widespread criminal practices.

So there you have it folks, the states are now going after the big Wall Street fish again, perhaps following up on the forestalled investigations they were set to launch back in 2003 when all of this mortgage madness could have been nipped in the bud.  In case you are in any doubt about just what was produced by the collusion between government and Wall Street, Ezra Klein interviewed financial analyst Janet Tavakoli last week, and here’s her response when being asked what this all means for the banks (after calling this crisis “the biggest fraud in the history of the capital markets”):

When we had the financial crisis, the first thing the banks did was run to Congress and ask for accounting relief. They asked to be able to avoid pricing this stuff at the price where people would buy them. So no one can tell you the size of the hole in these balance sheets. We’ve thrown a lot of money at it. TARP was just the tip of the iceberg. We’ve given them guarantees on debts, low-cost funding from the Fed. But a lot of these mortgages just cannot be saved. Had we acknowledged this problem in 2005, we could’ve cleaned it up for a few hundred billion dollars. But we didn’t. Banks were lying and committing fraud, and our regulators were covering them and so a bad problem has become a hellacious one. (emphases mine)

As Eskow said above, the bankers just want to make it seem that they’ve actually produced some semblance of profits for their shareholders so they can continue to collect their exorbitant bonuses.  That greed leads the bankers to convince regulators to help them avoid realizing the losses they should rightfully incur for such terrible investments.  That dynamic then leads to continued uncertainty in the market, which causes the banks not to lend to businesses, individuals, or even to each other. Greed has never run so rampant in the streets, and it is now manifestly clear that it is the greed of the privileged few that is genuinely handcuffing any sort of economic recovery for the rest of us.  Government regulators have bought into this system for years – when Eliot Spitzer began to make a stink, he was publicly disgraced and muzzled quickly, lest his accusations about the rotting core of the financial system lead people to look too closely so that the house of cards fell. 

Government has been complicit in this scheme since day one, which is the real reason none of the fraudsters have been put in prison yet – the circle would likely extend too widely and might ensnare some of those who are supposed to be on the “good” team.  We can’t have change in this country until we have an honest accounting of the mistakes of the past, and I surely hope that the state Attorneys General are allowed to run their investigations as they see fit, with no White House interference.  The President’s actions in confronting this crisis, including the actions of his deputies, will show just how committed to change he really is. 

New layout, and some good reading

I’m experimenting with a new site layout to try and make my blog more reader- and user-friendly (and more orange!)  Please feel free to comment and/or make suggestions about the design in the comments section if you’re so inclined.

While I have a more substantive post in the works concerning my personal suggestions for the upcoming November 2 elections here in California to be posted later this week, I figured I’d throw some great articles/blog posts I’ve been reading out there in case people are interested.

Election Polling: For the past couple months this election season I’ve been closely following DailyKos’ Steve Singiser for his nightly Polling and Political Wrap.  As I’ve noted previously, there is no doubt that DailyKos is a liberal site, but the fact is, Singiser provides an invaluable service in collecting the day’s polling data and providing some analysis of the results in an easy-to-read format.  From what I can tell, Singiser posts the Wrap each evening (aside from weekends) around 7-8PM PST, so if you’re excited about/dreading the elections this year and you’d like to follow the polling action as it develops, I can’t recommend a better source.

Speaking of election polling, the Pew Research Center for People & the Press released a groundbreaking study today documenting the fact that many pollsters rely on a fairly outdated polling methodology that tends not to contact voters whose sole telephone in their home is a cell phone (including yours truly and many other young voters).  This may be skewing polling data in favor of Republicans by 4-6 percentage points according to Pew’s research.  Josh Marshall at Talking Points Memo picks up the thread:

I would strongly recommend that Democratic enthusiasts not start adjusting the polls they're seeing by a 4-6 point margin. I will, shall we say, believe this one when I see it. It's also important to note that a number of national pollsters are already incorporating cell phones. Where the real vulnerability comes is in state and district polls and robo-pollsters -- like Rasmussen, PPP and SurveyUSA.

Again, in the past the differences usually seemed too small to figure significantly into the prediction equation. But this could be the cycle where that changes.

So yes, we’ll see what happens this election, and if pollsters have to make major alterations to their sampling models going forward.  It may seem trivial, but there’s nothing like polling to set the tone of an election season, and if those polls are incorrect (think Dewey defeats Truman) people could stay home because they think their team will lose, when in fact the opposite may be true.