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Charade Ends For Pseudo-Populists

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The Occupy Wall Street protest has exposed the politicians – who have always claimed to be populists – for what they really are:  tools of the plutocracy.  Conspicuously absent from the Wall Street occupation have been nearly all Democrats – despite their party’s efforts to portray itself as the champion of Main Street in its battle against the tyranny of the megabanks.  As has always been the case, the Democrats won’t really do anything that could disrupt the flow of bribes campaign contributions they receive from our nation’s financial elites.

The “no show” Democrats reminded me of an article which appeared at Truthdig, written by Chris Hedges, author of the book, Death of the Liberal Class.  In his Truthdig essay, Chris Hedges emphasized how the liberal class “abandoned the human values that should have remained at the core of its activism”:

The liberal class, despite becoming an object of widespread public scorn, prefers the choreographed charade.  It will decry the wars in Iraq and Afghanistan or call for universal health care, but continue to defend and support a Democratic Party that has no intention of disrupting the corporate machine.  As long as the charade is played, the liberal class can hold itself up as the conscience of the nation without having to act.  It can maintain its privileged economic status.  It can continue to live in an imaginary world where democratic reform and responsible government exist.  It can pretend it has a voice and influence in the corridors of power.  But the uselessness and irrelevancy of the liberal class are not lost on the tens of millions of Americans who suffer the indignities of the corporate state.  And this is why liberals are rightly despised by the working class and the poor.

If it had not been obvious before the 2010 elections, it should be obvious now.  Back in July of 2010, I was busy harping about how the Obama administration had sabotaged the financial “reform” bill:

As I pointed out on July 12, Mike Konczal of the Roosevelt Institute documented the extent to which Obama’s Treasury Department undermined the financial reform bill at every step.  On the following day, Rich Miller of Bloomberg News examined the results of a Bloomberg National Poll, which measured the public’s reaction to the financial reform bill.  Almost eighty percent of those who responded were of the opinion that the new bill would do little or nothing to prevent or mitigate another financial crisis.  Beyond that, 47 percent shared the view that the bill would do more to protect the financial industry than consumers.

Both healthcare and financial “reform” legislation turned out to be “bait and switch” scams used by the Obama administration against its own supporters.  After that double-double-cross, the liberal blogosphere was being told to “pay no attention to that man behind the curtain”.

In an earlier posting, I discussed the sordid efforts of the Democratic-controlled Senate to sabotage the financial reform bill:

The sleazy antics by the Democrats who undermined financial reform (while pretending to advance it) will not be forgotten by the voters.  The real question is whether any independent candidates can step up to oppose the tools of Wall Street, relying on the nickels and dimes from “the little people” to wage a battle against the kleptocracy.

Since the Occupy Wall Street demonstration has gained momentum, a number of commentators have analyzed the complicity of hypocritical Democrats in ceding more unregulated power to the very culprits responsible for causing the financial crisis.  The most important of these essays was an article written by Matt Stoller for Politico.  Stoller began the piece by debunking the myth that the cancer known as “financial deregulation” was introduced to the American system by the Reagan administration:

Like President Bill Clinton before him, Obama and his team believe in deregulation and are continuing a “let them eat cake”-style social contract that solidified during Ronald Reagan’s presidency.  As this contract has fallen apart, so has the strong coalition behind Obama’s presidency.

We haven’t seen a challenge to the bank-friendly Democratic orthodoxy for 40 years.  The progenitor of this modern Democratic Party was Jimmy Carter. Though Reagan and Clinton helped finish the job, it was Carter who began wholesale deregulation of the banking industry – as Jeff Madrick details in his new book, “The Age of Greed.”

In signing the landmark Depository Institutions Deregulation and Monetary Control Act of 1980, which lifted usury caps, Carter said, “Our banks and savings institutions are hampered by a wide range of outdated, unfair and unworkable regulations.”

Stoller provided some hope for disillusioned former supporters of the Democratic Party by focusing on three Democratic state attorneys general, who have been investigating possible fraud in the securitization of trillions of dollars of mortgages.  Matt Stoller referred to these officials – Eric Schneiderman of New York, Catherine Cortez Masto of Nevada and Beau Biden of Delaware – as the “Justice Democrats”.  As Stoller observed, a number of other officials have been influenced by the noble efforts of these Justice Democrats:

There are other politicians following this path.  Jefferson Smith, an Oregon state representative now running for mayor of Portland, successfully fought legislation to make foreclosures easier in that state.  Register of Deeds Jeff Thigpen in North Carolina took on banking interests by fighting foreclosure fraud.  Maryland Rep. Elijah Cummings has been dogged in his investigations of mortgage servicers.

It should not be surprising that these officials have been getting quite a bit of pushback from their fellow Democrats – including Delaware Governor Jack Markell as well as a number of high-ranking officials from the Justice Department, led by Attorney General Eric Hold-harmless.

When the Occupy Wall Street protest began on September 17, what little coverage it received from the mainstream media was based on the “giggle factor”.  With the passing of time, it becomes increasingly obvious that the news media and our venal political leaders are seriously underestimating the ability of the “little people” to fight back against the kleptocracy.


 

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Widespread Disappointment With Financial Reform

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Exactly one year ago, I wrote a piece entitled, “Financial Reform Bill Exposed As Hoax” wherein I expressed my outrage that the financial reform effort had become a charade.  The final product resulting from all of the grandstanding and backroom deals – the Dodd–Frank bill – had become nothing more than a hoax on the American public.  My essay included the reactions of five commentators, who were similarly dismayed.  I concluded the posting with this remark:

The bill that is supposed to save us from another financial crisis does nothing to accomplish that objective.  Once this 2,000-page farce is signed into law, watch for the reactions.  It will be interesting to sort out the clear-thinkers from the Kool-Aid drinkers.

During the year since that posting, I felt a bit less misanthropic each time someone spoke out, wrote an article or made a presentation demonstrating that our government’s “financial reform” effort was nothing more than political theater.  Last July, Rich Miller of Bloomberg News reported that according to a Bloomberg National Poll, almost eighty percent of those surveyed expressed “just a little or no confidence” that the financial reform bill would make their financial assets more secure.  Forty-seven percent believed that the bill would do more to protect the financial industry than consumers.  The American public is not as dumb as most people claim!

This past week brought us three great perspectives on the worthlessness of our government’s financial reform facade.  I was surprised that the most impressive presentation came from a Fed-head!   Thomas M. Hoenig, President and CEO of the Kansas City Federal Reserve Bank, gave a speech at New York University’s Stern School of Business, concerning the future of “systemically important financial institutions” or “SIFIs” and the Dodd-Frank Act.  (Bill Black prefers to call them “systemically dangerous institutions” or “SDIs”.)   After a great discussion of the threat these entities pose to our financial system and the moral hazard resulting from the taxpayer-financed “safety net”, which allows creditors of the SIFIs to avoid accountability for risks taken, Tom Hoenig focused on Dodd-Frank:

Following this financial crisis, Congress and the administration turned to the work of repair and reform.  Once again, the American public got the standard remedies – more and increasingly complex regulation and supervision.  The Dodd-Frank reforms have all been introduced before, but financial markets skirted them.  Supervisory authority existed, but it was used lightly because of political pressure and the misperceptions that free markets, with generous public support, could self-regulate.

Dodd-Frank adds new layers of these same tools, but it fails to employ one remedy used in the past to assure a more stable financial system – simplification of our financial structure through Glass-Steagall-type boundaries.  To this end, there are two principles that should guide our efforts to restore such boundaries.  First, institutions that have access to the safety net should be restricted to certain core activities that the safety net was intended to protect – making loans and taking deposits – and related activities consistent with the presence of the safety net.

Second, the shadow banking system should be reformed in its use of money market funds and short-term repurchase agreements – the repo market.  This step will better assure that the safety net is not ultimately called upon to bail them out in crisis.

Another engaging perspective on financial reform efforts came from Phil Angelides, who served as chairman of the Financial Crisis Inquiry Commission, which conducted televised hearings concerning the causes of the financial crisis and issued its final report in January.  On June 27, Angelides wrote an article for The Washington Post wherein he discussed what caused the financial crisis, the current efforts to “revise the historical narrative” of what led to the economic catastrophe, as well as the efforts to undermine, subvert and repeal the meager reforms Dodd-Frank authorized.  Angelides didn’t pull any punches when he upbraided Congressional Republicans for conduct which the Democrats have been too timid (or complicit) to criticize:

If you are Rep. Paul Ryan, you ignore the fact that our federal budget deficit has ballooned more than $10 trillion annually since the financial collapse.  You disregard the reality that two-thirds of the deficit increase is directly attributable to the economic downturn and bipartisan fiscal measures adopted to bolster the economy.  Instead of focusing on the real cause of the deficit, you conflate today’s budgetary disaster with the long-term challenges of Medicare so you can shred the social safety net.

*   *   *

If you are most congressional Republicans, you turn a blind eye to the sad history of widespread lending abuses that savaged communities across the country and pledge to block the appointment of anyone to head the new Consumer Financial Protection Bureau unless its authority is weakened.  You ignore the evidence of pervasive excess that wrecked our financial markets and attempt to cut funding for the regulators charged with curbing it.  Across the board, you refuse to acknowledge what went wrong and then try to stop efforts to make it right.

David Sirota wrote a great essay for Salon entitled, “America’s unique hatred of finance reform”.  Sirota illustrated how bipartisan efforts to undermine financial reform are turning America into – what The Daily Show with Jon Stewart called – “Sweden’s Mexico”:

On one hand, Europe’s politics of finance seem to be gradually moving in the direction of Sweden — that is, in the direction of growth and stability.  As the Washington Post reports, that Scandinavian country — the very kind American Tea Party types write off with “socialist” epithets — has the kind of economy the U.S. can now “only dream of:  growing rapidly, creating jobs and gaining a competitive edge (as) the banks are lending, the housing market booming (and) the budget is balanced.”  It has accomplished this in part by seriously regulating its banking sector after it collapsed in the 1990s.

*   *   *

After passing an embarrassingly weak financial “reform” bill that primarily cemented the status quo, the U.S. government is now delaying even the most minimal new rules that were included in the legislation.  At the same time, Senate Republicans are touting their plans to defund any new financial regulatory agencies; the chairman of the House Financial Services Committee has declared that “Washington and the regulators are there to serve the banks” — not the other way around; and the Obama administration is now trying to force potential economic partners to accept financial deregulation as a consequence of bilateral trade deals.

Meanwhile, the presidential campaign already looks like a contest between two factions of the same financial elite — a dynamic that threatens to make the 2012 extravaganza a contest to see which party can more aggressively suck up to the banks.

Any qualified, Independent political candidate, who is willing to step up for the American middle class and set out a plan of action to fight the financial industry as well as its lobbyists, would be well-positioned for a 2012 election victory.


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