US Political Financial Reform Suggestions

April 6, 2010

 

Why the Fight for Financial Reform Needs to Get Much More Personal

Excerpt

Yet, when it comes to selling financial reform, Democrats are making the same mistake all over again. The nuts and bolts of the legislation — which are even harder for the public to get its head around than they were with health care — are being given a full airing in Congress, on op-ed pages and blogs, and on TV. And these devilish details — capital requirement levels, proprietary trading restrictions, the independence of the proposed consumer financial protection agency, etc., etc. — are critical. They are critical because it was getting them wrong that promoted the devastation in people’s lives we now see around the country. But the human element is once again getting short shrift.

This is a big-time blunder. Ask the proverbial men and women on the street where they stand on the Volcker Rule, and watch their eyes glaze over. The administration needs to make it clear: we don’t need to overhaul our financial system because the Wall Street sandbox has gotten a little messy, and bank CEO bonuses have gotten too big. We need to overhaul our financial system to make sure that system isn’t rigged to destroy the lives of millions of middle class Americans who worked hard, played by the rules, and ended up holding the short end of the stick when the big banks drove our economy over the edge of the cliff… Read more by Arianna Huffington, Huffington Post

This is a great and thoroughly realistic appraisal of the US political situation — and the perpetuated Democratic mistakes — combined with sound suggestions aiming at what the administration ought to do better.

Supplementary: Global Haplifnet – vanguard topics

 haplif – Frank Kalder (HuffPost profile/comments)

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Barack Obama’s first State of the Union speech

January 28, 2010

 

Excerpt – For these Americans and so many others, change has not come fast enough. Some are frustrated; some are angry. They don’t understand why it seems like bad behavior on Wall Street is rewarded but hard work on Main Street isn’t, or why Washington has been unable or unwilling to solve any of our problems. They are tired of the partisanship and the shouting and the pettiness. They know we can’t afford it. Not now.

So we face big and difficult challenges. And what the American people hope what they deserve is for all of us, Democrats and Republicans, to work through our differences, to overcome the numbing weight of our politics. For while the people who sent us here have different backgrounds, different stories and different beliefs, the anxieties they face are the same. The aspirations they hold are shared: a job that pays the bills, a chance to get ahead. Most of all, the ability to give their children a better life.

You know what else they share? They share a stubborn resilience in the face of adversity. After one of the most difficult years in our history, they remain busy building cars and teaching kids, starting businesses and going back to school. They’re coaching Little League and helping their neighbors. As one woman wrote me, ”We are strained but hopeful, struggling but encouraged.”

It is because of this spirit, this great decency and great strength that I have never been more hopeful about America’s future than I am tonight. Despite our hardships, our union is strong. We do not give up. We do not quit. We do not allow fear or division to break our spirit. In this new decade, it’s time the American people get a government that matches their decency, that embodies their strength… Full text at New York Times

HuffPost comment (excerpt):

While most State of the Union speeches have a bit of a kitchen-sink feel to them, this one seemed particularly so with its blink-and-you-missed-it mentions of “earmark reform” and cracking “down on violations of equal pay laws — so that women get equal pay for an equal day’s work.” It felt less like an overriding vision for the country, and more like an attempt to deliver at least one applause line for every constituency in the country.

That’s not political leadership. Obama clearly understands this. It’s why he ended his speech by mocking politicians who “do what’s necessary to keep our poll numbers high, and get through the next election instead of doing what’s best for the next generation.” And he just as clearly has the ability to articulate a bold vision for the nation and lead it where it desperately needs to go… By Arianna Huffington

haplif – Frank Kalder (Global Haplifnet)


Barack Obama proposed restricting the big U.S. banks

January 22, 2010

 

The new proposal from Obama intends to limit speculation by commercial banks and to keep financial institutions from growing so big that they pose a risk to the economic system.

“When you see more and more of the financial sector basically churning transactions and engaging in reckless speculation and obscuring underlying risks in a way that makes a few people obscene amounts of money but doesn’t add value to the economy — and in fact puts the entire economy at enormous risk — then something’s got to change,” Obama said in an interview released yesterday by Time magazine.

Obama has branded bank executives as “fat cats” and proposed a fee on large banks to cover shortfalls in the government’s $700 billion financial rescue fund.

Expanding on earlier measures, Obama endorsed Volcker’s proposal to restrict proprietary trading by commercial banks. That would separate commercial banks from investment banks, a line blurred a decade ago by the repeal of the Depression-era Glass-Steagall Act.

This restriction would affect some of the biggest banks, including Bank of America Corp., Goldman Sachs and Citigroup Inc. … Read more at Huffington Post (VIDEO embedded)

The U.S. and the global community have come through a terrible financial crisis. A high price was paid particularly by the American people. Of course, it simply cannot be returned to business as usual.

Supplementary: Global Haplifnet – vanguard topics  

haplif – Frank Kalder (HuffPost profile/comments)


Fundamentally flawed theory? Psychological problem

January 21, 2010

 

During the economic turmoil of the last few years, Nobel Prize-winning economist and Columbia University professor Joseph Stiglitz has been one of the most strident and incisive critics of the historic bailout of the banking sector.

HuffPost interview excerpted:

With so much talk of a recovery, where is our economy right now?

The way I put it is that, if you look back before the crisis, the American economy was basically supported by a housing bubble, which supported a consumption boom. In one year, we had $950 billion in mortgage equity withdrawals. That got reflected in the statistics and our savings rate went to zero.

The implication is that post-crisis, even if we have our banking system work, it is not likely that we will go back to a zero savings rate in the U.S. If we don’t go back to a zero savings rate, it’s going to be hard to have a robust recovery unless you find something else to fill in the gap.

A recovery is predicated on the financial sector working, but obviously the sector isn’t working. And there is another set of problems: Small businesses can’t get loans. We are in that dynamic process now, where some of the things that we did [to steady the economy] have the characteristics of stretching out our economy’s adjustments. These steps buoyed the economy in the short run, but may be more likely to extend the length of the downturn.

Our response to the crisis was party based on a fundamentally flawed theory. The theory was that we were having a psychological problem, and that if we could only restore confidence then the economy would go back to normal. Of course, we had a psychological problem, which was the bubble, but we’re back to reality now.

This approach is having profound implications that are likely to last. In 2010, the projections say that there will be between 2.5 to 3.5 million foreclosures, more than the 2 million that occurred in 2009. So, that’s an example of the dynamics going the wrong way, probably because we put in place the wrong policies… Read more at Huffington Post 

haplif – Frank Kalder  (Global Haplifnet)


U.S. record budget gap & repaying taxpayers for the bank bailout

January 14, 2010

 

The U.S. excess of spending over revenue (due to higher unemployment and the governmental spending money to help the economy recover) rose to $91.9 billion last month, compared with a deficit of $51.8 billion in December 2008, the Treasury Department announced yesterday in Washington in its monthly budget statement. The U.S. has posted a record 15 straight monthly deficits. (Bloomberg) 

 Obama To Push Tax On Being ‘Too Big To Fail’

Barack Obama will unveil today a proposed levy on the nation’s biggest financial firms structured not just to repay taxpayers for the bank bailout, but to recoup some of the public subsidy that “too big to fail” banks have enjoyed on account of their implicit government backstop, a senior administration official told the Huffington Post.

 Supplementary: Global Haplifnet – vanguard topics

haplif – Frank Kalder (HuffPost profile/comments)


Banking – huge, growing chasm between the fortunes …

December 30, 2009

 

Move Your Money: A New Year’s Resolution by Arianna Huffington, Huffington Post  

Last week, over a pre-Christmas dinner, the two of us, along with political strategist Alexis McGill, filmmaker/author Eugene Jarecki, and Nick Penniman of the HuffPost Investigative Fund, began talking about the huge, growing chasm between the fortunes of Wall Street banks and Main Street banks, and started discussing what concrete steps individuals could take to help create a better financial system. Before long, the conversation turned practical, and with some help from friends in the world of bank analysis, a video and website were produced devoted to a simple idea: Move Your Money.

The big banks on Wall Street, propped up by taxpayer money and government guarantees, have had a record year, making record profits while returning to the highly leveraged activities that brought our economy to the brink of disaster… Read more at HuffPost

“Administrators to Lehman Brothers’ European arm will soon be able to start returning $11bn (£7bn) of client assets trapped in the bank since its collapse after yesterday winning support for a distribution plan .

The agreement is a milestone in the unwinding of the bank’s operations. Policymakers are watching the process with a view to reforms that would avoid a repeat of the turmoil triggered by Lehman’s collapse…” (Financial Times, UK, Dec 30)

Indeed, Arianna, those “too big to fail” banks (JP Morgan/Chase, Citi, Wells Fargo, and Bank of America) may gamble with their own money. Surely, of course, we’d be better off – and safer – if big banks turned into smaller ones.

 Supplementary: Global Haplifnet – vanguard topics

haplif – Frank Kalder (HuffPost profile/comments)


HuffPost’s U.S. Health Care Reform Sifting

December 11, 2009

 

Health Care Reform: Sifting Through the Suboptimal Solutions*

Referring to such previous topic mentions –  e.g. in August  –  I agree with you, Arianna, that it will be a suboptimal solution worth supporting those elements you described if the final bill did contain them. Yes, indeed, the U.S. broken system got to be fixed.  

The aim “we can get back to being a country able to produce optimal responses to our biggest problems” may then be achieved. 

haplif – Frank Kalder (HuffPost profile/comments)

Supplementary: Global Haplifnet – vanguard topics

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*) by Arianna Huffington, co-founder and editor-in-chief, Huffington Post