Nomi Prins on ongoing financial turmoil

There's a new "Corporations and Democracy" show online at www.afdradio.org. Nomi Prins, author and senior fellow at Demos, discusses the continuous banking and financial disaster and what listeners can do about it with hosts Tom Wodetzki and Toni Rizzo.

Nomi is a journalist and senior fellow at Demos. Her latest book is It Takes a Pillage: Behind the Bonuses, Bailouts, and Backroom Deals from Washington to Wall Street (Wiley, September, 2009). Her 2004 book, Other People’s Money: The Corporate Mugging of America (The New Press, October 2004) was chosen as a Best Book of the year by The Economist, Barron's and The Library Journal.

She talks about the financial industry's resistance to structural reform, and industry leaders' lack of concern for long-term stability if the regulation that would achieve it comes at the cost of short-term profit.

"Corporations and Democracy" is aired every other week on KZYX&Z-FM, Mendocino County Public Broadcasting in Philo, California.

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Today's news and views

● Despite being met by rain and a moat (!), protestors inside and outside JP Morgan Chase & Co.'s annual meeting turned out in force to criticize the cormpany's handing of mortgage foreclosures. Story here and video and photos here.

● James Bopp's proposed Super PAC may be too chummy with RNC operatives to be legal, according to critics. Meh, says Bopp, who told the Wall Street Journal Monday that "the Supreme Court doesn’t care, and I don’t care, and the [Federal Election Commission] doesn’t care. No one that matters cares.”

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Robert Reich: Why the Obama Tax Deal Confirms the Republican Worldview

Reich is right on the money when he writes that power and privilege at the top--not elected officials but the power of the people who fund their campaigns--make it impossible to write tax and social policy that benefits the nation as a whole. But political bribery is a bipartisan problem. It's a rare industry that doesn't drop cash on both sides of the aisle, which is why we need to clean up the system, not just switch the players.

by Robert Reich. Posted June 30 on The Huffington Post

Apart from its extraordinary cost and regressive tilt, the tax deal negotiated between the president and the Republicans has another fatal flaw.

It confirms the Republican worldview.

Americans want to know what happened to the economy and how to fix it. At least Republicans have a story--the same one they've been flogging for thirty years. The bad economy is big government's fault and the solution is to shrink government.

Here's the real story. For three decades, an increasing share of the benefits of economic growth have gone to the top 1 percent. Thirty years ago, the top got 9 percent of total income. Now they take in almost a quarter. Meanwhile, the earnings of the typical worker have barely budged.

The vast middle class no longer has the purchasing power to keep the economy going. (The rich spend a much lower portion of their incomes.) The crisis was averted before now only because middle-class families found ways to keep spending more than they took in--by women going into paid work, by working longer hours, and finally by using their homes as collateral to borrow. But when the housing bubble burst, the game was up.

The solution is to reorganize the economy so the benefits of growth are more widely shared. Exempt the first $20,000 of income from payroll taxes, and apply payroll taxes to incomes over $250,000. Extend Medicare to all. Extend the Earned Income Tax Credit all the way up through families earning $50,000. Make higher education free to families that now can't afford it. Rehire teachers. Repair and rebuild our infrastructure. Create a new WPA to put the unemployed back to work.

Pay for this by raising marginal income taxes on millionaires (under Eisenhower, the highest marginal rate was 91 percent, and the economy flourished). A millionaire marginal tax of 70 percent would eliminate the nation's future budget deficit. In addition, impose a small tax on all financial transactions (even a tiny one--one half of one percent--would bring in $200 billion a year, enough to rehire every teacher who's been laid off as well as provide universal preschool for all toddlers). Promote unions for low-wage workers.

But here's the obstacle. As income and wealth have risen to the top, so has political power. Money is being used to bribe politicians and fill the airwaves with misleading ads that block all of this.

The midterm elections offered dramatic evidence. NBC news reported shortly after Election Day, for example, that Crossroads GPS, one of the biggest Republican secret-money organizations, got "a substantial portion" of its loot from a group of extremely wealthy Wall Street hedge fund and private equity managers. Why would they sink so much money into the midterms? Because they've been so strongly opposed to a proposal by congressional Democrats to treat the earnings of hedge fund and private equity managers as ordinary income rather than capital gains (subject to only a 15 percent rate).

In other words, the problem isn't big government. It's power and privilege at the top.

So another part of the solution is to limit the impact of big money on politics. This requires, for example, publicly-financed campaigns, disclosure of all sources of political spending, and resurrection of the fairness doctrine for broadcasters.

It's the same power and privilege that got the Bush tax cuts in the first place, and claimed the lion's share of its benefits. The same power and privilege that got the estate tax phased out.

Get it? By agreeing to another round of massive tax cuts for the wealthy, the president confirms the Republican story. Cutting taxes on the rich while freezing discretionary spending (which he's also agreed to do) affirms that the underlying problem is big government, and the solution is to shrink government and expect the extra wealth at the top to trickle down to everyone else.

Obama's new tax compromise is not only bad economics; it's also disastrous from the standpoint of educating the public about what has happened and what needs to happen in the future. It reinforces the Republican story and makes mincemeat out of the truthful one Democrats should be telling.

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How it is, from Bernie Sanders

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A forthcoming film on the financial crisis looks at the planned implosion of US prosperity

How do the rich get richer? Paradoxically, they collapse the economy, according to the in-the-works documentary "Heist," which says there was nothing accidental about the current global financial crisis. Its roots are in Reaganomics and financial industry deregulation, and beginning in the 1970s it started decades of wealth transfer to the US's top 1% asset-holders from everybody else.

From the website:

The collapse of America's economy is the result of conscious choices made over thirty five years by a small number of other Americans: mostly leaders of corporations and their allies—the ones who “make things happen”—people like Alan Greenspan, Robert Rubin, Hank Paulson, Phil Gramm, Larry Summers—and the biggest lobbying interest in Washington, D.C., the U.S. Chamber of Commerce. To this small group, our country’s economic collapse is not a catastrophe, but rather the planned outcome of their long, patient work. Their just reward. For the rest of us, it is merely the biggest heist in American history.

Heist tells the story of how corporations and their political allies in Congress orchestrated the greatest theft in history -- the robbery of Americans' prosperity, savings, and retirement security.

The website features a video trailer which we were unable to embed here, but is worth watching, plus background info and links to action groups.

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Fighting to Protect Consumers

Consumer protection is a little stronger thanks to President Obama's appointment of Elizabeth Warren as adviser on the creation of the Consumer Financial Protection Bureau. The appointment is an end-run around potentially endless Senate confirmation hearings, and a victory for the millions of people who spoke out in favor of her hiring. But we still need to stand behind the Consumer Financial Protection Bureau and make sure she has the authority she needs to establish an agency that will be a no-compromise advocate for the people.

by Elizabeth Warren. Posted September 17 on OpEd News.

Over the past several weeks, the President and I have had extensive conversations about the vital importance of consumer financial protection.

The President asked me, and I enthusiastically agreed, to serve as an Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau. He has also asked me to take on the job to get the new CFPB started--right now. The President and I are committed to the same vision on CFPB, and I am confident that I will have the tools I need to get the job done.

President Obama understands the importance of leveling the playing field again for families and creating protections that work not just for the wealthy or connected, but for every American. The new consumer bureau is based on a pretty simple idea: people ought to be able to read their credit card and mortgage contracts and know the deal. They shouldn't learn about an unfair rule or practice only when it bites them--way too late for them to do anything about it. The new law creates a chance to put a tough cop on the beat and provide real accountability and oversight of the consumer credit market. The time for hiding tricks and traps in the fine print is over. This new bureau is based on the simple idea that if the playing field is level and families can see what's going on, they will have better tools to make better choices.

If the CFPB can succeed at leveling the playing field, we can go a long way toward repairing a gaping hole in the budgets of millions of families. But nobody has ever thought or argued that the consumer bureau can fix everything. Lost jobs, stagnant incomes, rising costs for college, dwindling retirement savings--there's a lot of work to be done.

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From the floor show for the casino economy?

No, from a collaboration between NPR's Planet Money, This American Life, and a team of investigative journalists from ProPublica, who exposed some of the conflicts of interest that created the financial collapse -- and cost the public a huge amount of money and millions of people their jobs -- in "Inside Job." Listen at the link. Not unexpectedly, the journalists found that many on Wall Street anticipated the collapse and set the public up for it for the fees, bonuses and other gains they reaped.

Bet Against The American Dream from Planet Money on Vimeo.

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The money's being moved!

According to a Zogby Interactive survey, 32% of US adults have considered move some or all of their banking business from a large national bank to a community bank or credit union because of disapproval of big-bank policies, 14% have moved some of their banking from a big bank to a community institution, and 9% say they did it as a protest.

The survey reached 2,068 U.S. adults in mid-February. You can read more here.

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This week: Call in for consumer financial protection and Wall Street accountability

This week we're joining with groups across the country to ask you to call your Senators to demand creation of a Consumer Financial Protection Agency and stronger regulatory reform of the financial industry--it's time to hold Wall Street accountable for the damage they've done to the economy, including $11 trillion in lost family wealth, $14 trillion in bailouts, and more than 8 million jobs.

Join a National Call-In Week, today through March 4, and speak out now. Find contact information here or dial this toll-free number provided by SEIU: 866-544-7573 (note--as of yesterday this number asked you for a zip code and then connected you automatically with one of your senators--to reach the other you'll have to dial directly).

The first senators to consider reform legislation, including the proposed Consumer Financial Protection Agency, are those that sit on the Banking and Agriculture Committee: Sen. Lincoln (AR), Sen. Bennet (CO), Sen. Dodd (CT), Sen. Bayh (IN), Sen. Tester (MT), Sen. Menendez (NJ), Sen. Schumer & Sen. Gillibrand (NY), Sen. Reed (RI), Sen. Johnson (SD), and Sen. Warner (VA).

But even if your senator isn't on this list, make the call--we need a groundswell from across the country in favor of strong reform. In the first nine months of 2009, the financial services industry spent over $344 million on lobbying, while the US Chamber of Commerce spent $2 million on advertising, including ads attacking the proposed Consumer Financial Protection Agency. As Paul Krugman points out, the House already passed a fairly strong reform bill, but Senate Republicans are blocking further movement, and Democrats are wavering. That's why you need to call this week. Money talks--we need to speak out too!

Tell your Senators:

• To vote for financial reform that creates an independent consumer protection agency--not just a new department under an existing regulator
• To empower the agency to rein in the kind of financial products--deceptive mortgages and exorbitant overdraft fees--that are enriching banks at the expense of struggling families
• That creation of an independent CFPA will streamline federal regulation, increase industry accountability, and reduce the profitability of the kind of high-risk, high-consumer-cost products that precipitated the foreclosure crisis.

For more background, see this report by Demos Foundation. And thanks for calling!

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New Mexico moves to move their money--why not you?

The New Mexico House of Representatives has passed a bill enabling the possible switch of $2-5 billion in state deposits to accounts in community banks and credit unions. Thus far, large national banks, like Bank of America and Wells Fargo, have held the funds.

The New Mexico effort got a mention on the Huffington Post, and a credit union executive said that the media spotlight helped get the bill through the House.

You can read more about the New Mexico vote here, and learn more about the Move Your Money initiative here.

Move your money notes that states and local governments have a total of $230 billion in the nation's largest banks. But it's community banks that do the lion's share of lending to small and new businesses, a key source of credit for a rejuvenated economy.

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Tell your senator to protect consumer finance regulation! Don't kill the Consumer Financial Protection Agency!

Last month, the House of Representatives narrowly passed legislation to create a new Consumer Financial Protection Agency. This agency would police bank practices on credit cards and mortgages and establishes new regulations for derivative trading and for credit rating--both of which, when left to the banks to mis-manage, helped precipitate last year's economic collapse and bank bailout.

The bill is not a cure-all. After the financial industry spent $5 billion over the last ten years playing politics to dismantle regulation and oversight, it would be unrealistic to expect that this bill is anything more than the first step in the right direction.

But even this first step toward controlling the casino economy is now in danger, as the banking lobby takes aim at the bill in the Senate.

Today banking industry lobbyists and the US Chamber of Commerce will be visiting senators to encourage them to kill the bill.

Please call your senators today and tell them to support the Consumer Financial Protection agency. This is a bread-and-butter issue that they should stand behind--if they're representing their constituents and not the banks.

Remember, a call carries more weight than an email, but if you can't call, please click here--edit your email to reflect your views-- and make your voice heard!

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Math meets the calendar, and the right is way off

We are not partisan--both sides feed at the same trough--but here's some faulty thinking popularly associated with one side of the aisle. It always helps your argument to get the math and the dates straight. Hat tip to Colonel Colin J. N. Chauret, USAF Ret., of Texas:

RE: Republican's "Tea Party March"
Reference this weekend's Washington DC "Tea Party March" by Republicans concerned with Obama's deficit spending. What a short memory they have. The 8 years George W. Bush was in office equates to only 3.4% of our nation's history of 232 years, while his deficit spending of $4.9 trillion equates to 46.2% of the total debt when he left office of $10.6 trillion. Where were the Republican's marches then? And, this does not include the $712 billion of TARP money, bank bailout money, Bush signed into legislation the last few days in office, which is now showing up in Obama's deficit spending.

(All numbers can be verified by going to "US National Debt History to the Penny" on the Internet)

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GANE online--your analysis is welcome!

GANE--the General Agreement on a New Economy--is a document outlining a new model for economic development and analysis that emphasizes full employment, sustainable development, economic equity and community federalism. GANE, a project of the Alliance, has been organized by Ruth Caplan, coordinator of AfD's program on Corporate Globalization and Positive Alternatives.

Community federalism is a systemic approach to development that centers on the local community and builds outward to regional and national levels. Such an approach has become more and more necessary as we face a host of interrelated problems--climate change, off-shoring of jobs, fallout from speculative busts, degradation of the natural and social commons--from pure water to public education.

GANE was developed by the Economics Working Group, while a project of the Tides Foundation. It is the result of a robust discussion among forward thinking economists and policy advocates taking place over several years. And it is a work-in-progress, that depends on its readers to share their ideas.

If it bothers you that in this economic crisis Wall Street is getting bailed out while families and communities are left to fend for themselves, or if you question the veracity of current economic indices as a real reflection of our collective welfare, or if you feel that local communities are getting ignored in economic decision-making, check GANE out. You are asking some of the same questions we are and you may like some of our ideas.

The project website is here: www.greenecon.org. You can read a summary or a the full document, and share your ideas as well. Answers to our economic problems should come out of a broad public dialogue. Join in!

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Les Leopold speaks in Portland--with video

On Friday, author Les Leopold shared his expertise on the roots and remedies of the current recession to an audience of about 150 people here in Portland. He was also interviewed earlier in the day on KPOJ-AM and KBOO-FM. Leopold's most recent book is The Looting of America, How Wall Street's Game of Fantasy Finance Destroyed Our Jobs, Pensions and Prosperity and What We Can Do About It.

Both Will Seaman of pdxjustice.org and Robert Coones videotaped the talk (and an important intro by AfD Portland President David Delk on a statewide campaign finance reform initiative that needs Oregonians' support!). Robert Coones' video is embedded below--the link is http://blip.tv/file/2346884/.

Click to play

David Delk also interviewed Les for the "Conversations with Doctor Don" cable program. That one hour interview will be available for viewing in the Portland Metro area as follows:
Tuesday July 14th, 11:00 PM Channel 11
Friday, July 17th, 8 PM Channel 21
Saturday, July 18th, 9 am Channel 21
Sunday, July 19th, 3 pm Channel 21
Monday, July 20th, 1 pm Channel 21

This interview will also be available on the web at video.google.com; we'll post here so check back! A Portland book study group may also be forming to read Les's book--if you're interested, email David Delk at davidafd@msn.com.

Thanks to Alliance for Democracy for arranging Les's visit to Portland and to the co-sponsors of the event: Economic Justice Action Group of the First Unitarian Church, The Real Wealth of Portland, and The Women's International League for Peace and Freedom, as well as Josie Ko.

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Resources for studying sustainable economics

Re-Imagining Economics is a group of educators and activists seeking to expand popular understanding of how economies actually operate and how to foster more sustainable and socialized economic models. The project includes members of the Alliance's Columbus, OH, group.

Why "re-imagining?" The group's position is that the current definition of economics has collapsed in the face of growing global economic instability and crisis, and environmental degradation. Consequently, they write, "the prevailing model of economics needs to be replaced, not merely fine tuned."

To make that replacement a grassroots project, they've developed a series of single sheet flyers on a range of topics related to the history of money and banking, cooperatives, corporatism, and related topics, which can be read online or downloaded from this section of their website. They're also interested in working with organizations which have similar or related interests. Contact them at economics@arawakcity.org.

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A New Way Forward sponsors national economic crisis video screenings & forums

If a bank's too big to fail, it's too big period. To build support for commonsense reconstruction of our financial system, A New Way Forward is asking people to host national video screenings and town hall forums to learn about the financial crisis and begin working on restoring our economy and democracy.

To see or download the video, to find an event in your area or to publicize your own screening, visit the website here.

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Rally this weekend to break up the banks

Tomorrow, Saturday April 1, A New Way Forward is sponsoring a nationwide day of action to demand that our leaders (1) nationalize (2) reorganize, and (3) decentralize the banks as a first step toward building a more just economy.

On Saturday, come to a rally near you for speeches, street theatre, petition gathering, and phonebanking to Congress. Check this list to see if there's an action in your area:

http://www.anewwayforward.org/rally-list.php

If you're not near a demonstration, or can't attend, make sure your Senators and Representative know you have taken a stand. Sign a petition at Democrats.com to "Break Up The Banks."

http://www.democrats.com/break-up-the-banks

No more bonuses for incompetent, short-sighted management. No more bailouts for the same institutions that drove us into the hardest times we've seen since the Depression. Join a march and demand an economy that serves and sustains all of us, and protects our homes, jobs, health and environment.

Want to know more about what a people-centered economy might look like--and how to organize to build it? Check out the Winter 2009 issue of Justice Rising, Money for People, Not Corporate Plunder, available here.

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10,000 march on Wall Street

Led by long-time civil rights activist Rev. James Lawson, as well as veterans, military family members, and peace activists, more than 10,000 marched on Wall Street Saturday, April 4, to demand an end to the wars in Iraq and Afghanistan, and an economic stimulus plan directed at people in need. The march and peace fair that followed were organized by United for Peace with Justice and its coalition groups.

Lawson spoke on behalf of the 90 million Americans living in poverty, toward whom economic policies must be directed if this country intends a real recovery. He emphasized the connection between peace abroad and justice here; "I say if we want peace to blossom, we must eradicate poverty, racism, sexism, violence, and greed in the U.S. Peace cannot come by crying peace. Peace can only begin to emerge when justice does.'

The marchers passed the Federal Reserve building, surrounded the New York Stock Exchange, and ended in Battery Park for a Peace and Justice Fair. Photos by UFPJ Steering Committee member, Mike Hearington are here.

You can donate to United for Peace here. They have several actions planned; you can read more on their website.

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Clean elections: the problem and the solution

Two interesting observations from a recent California Clean Money Campaign newsletter:

First, the Center for Responsive Government shows that spending on Capitol Hill is truly the gold standard in high-yield investments. So far, 161 financial institutions have received federal bailout money. Their initial investment: $114.2 million ($37.5 million to contributions to candidates and almost $76.7 million in lobbying expenditures in 2008 by financial institutions). Yield so far? $305 billion in TARP funds (and rising!).

This is a rate of return of more than 2,500!

On the plus side, the November elections saw a record number of Clean Elections candidates win their races, with more than 370 Clean-running candidates voted to statehouses, the judiciary, and statewide positions in six states. Citizens in Arizona, Connecticut, Maine, New Mexico, North Carolina, and Portland, Oregon voted for a diverse mix of Clean Elections candidates from across the political spectrum -- Democrats and Republicans, incumbents and challengers, men and women. Some highlights:

• Connecticut held its first-ever elections under their new public campaign finance program, and 81% of the seats in the General Assembly are held by officials who participated in the program.
• An astonishing 93% of Connecticut's women candidates ran under the public financing system, including 41 of the 45 women incumbents running for re-election!
• In Maine, where Clean Elections were instituted in 2000, Clean Elections officials now hold 85% of the seats in the Maine legislature.
• Nine of Maine's Cleanly-elected officials in the current legislature are under the age of 30.
• 54% of the Arizona legislature is Cleanly-elected, up from 42% in 2008. Also, 8 of Arizona's 11 statewide officials used the state's Clean Elections program.

Clean Elections candidates were also elected in Portland, OR, New Mexico, and North Carolina.

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Tell Congress and Secretary of Treasury Timothy Geithner:

STOP THE CASINO ECONOMY

INVEST IN THE REAL ECONOMY

Treasury Secretary Geithner has announced his plan to fix Wall Street. It is time to tell Congress you want strict regulation of Wall Street.

Call your Senators and Representative today. Click here to get their phone numbers. Tell them you want strict regulation of Wall Street. Tell them

• Just pumping more taxpayer dollars into this system will not fix it.
  
• Any financial institution getting taxpayer dollars should first stop issuing credit default swaps; collateralized debt obligations; and securitization of risky mortgages, credit card loans and car loans. All of these are unregulated and contribute to the casino economy.
  
• Nor should these financial institutions be allowed to do business with hedge funds and other unregulated investor consortia.
  

Also call Rep. Barney Frank, Chair of the House Financial Services Committee (202-225-5931) with this message.

And call the Department of Treasury press office, too, at 202-622-2960. It’s the only number at Treasury we could find.

Here is more background to read before you call.

When Secretary Geithner introduced the Financial Stability Plan on February 10, with the broad outlines of how the administration plans to fix Wall Street, he said not one word about his intention to reign in the casino economy, including the totally unregulated $60 TRILLION in "credit default swaps."

Geithner noted: “Investors and banks took risks they did not understand” ... as if they were innocent bystanders to the culture of greed.

He does go on to admit failure in the system.

“There were systematic failures in the checks and balances in the system, by Boards of Directors, by credit rating agencies, and by government regulators. Our financial system operated with large gaps in meaningful oversight, and without sufficient constraints to limit risk. Even institutions that were overseen by our complicated, overlapping system of multiple regulators put themselves in a position of extreme vulnerability.

“These failures helped lay the foundation for the worst economic crisis in generations. “

But then he says “We believe our policies must be designed to mobilize and leverage private capital...”

It is the over-leveraging of private capital that got us into this fix. Mortgage defaults are just the tip of the iceberg and don’t begin to explain the global financial collapse. Funny money was created by

• bundling high risk mortgages into AAA investments, a form of “securitization”
  
• insuring risky investments with no collateral to back up the risk, known as credit default swaps
  
• allowing investors to borrow money in order to gamble on whether a stock, a currency, or the stock market itself will go up or down at some future time.
  

No wonder this house of cards collapsed!

Be clear, the issue of executive compensation, which is all over the press, is a diversion from the root of the problem. These executives have overseen the financial institutions responsible for creating the casino economy. Docking their pay does not begin to compensate for the damage they have done.

No More Casino Economy!

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