A New Wave

The woman who tried to stop the financial meltdown

Maybe it's useless to lay blame for our current financial mess, but I think women, generally, would have been less willing to engage in the extreme risks that spawned financial derivatives - those toxic financial instruments that have brought the world's economy and finances to the brink of failure.

One woman in particular saw the problems posed by these instruments and their lack of regulation and took on three of the best-known (now infamous?) names in the financial sector: Alan Greenspan, Robert Rubin and Arthur Levitt.

Her name is Brooksley Born.(h/t to NWLC's blog, Womenstake) .

From 1996 to 1999 she chaired the Commodity Futures Trading Commission (CFTC), the federal agency which oversees the futures and commodity options markets as well as the individuals who participate in those markets. Her reputation is one of championing the rights of consumers. 

She, a former president of the Stanford Law Review, a public-interest lawyer, and a Clinton appointee to the commission, fought them and Wall Street lobbyists.

Born wanted more regulation of financial derivatives. The other big guns did not.

Some people, notably Warren Buffett, agreed with Born. But, at the time, it was more of an inside-the-beltway power struggle than a decision that would affect the financial livelihood of millions of Americans.

We now know that the largely unregulated market in financial derivatives, particularly in credit default swaps, contributed to the economic collapse that has sent ripples into millions of American homes.

Briefly, here is what Born knew and did:

While on the commission and after becoming its chair, Born sought comments on the need to regulate derivatives, but the request was opposed by then-Federal Reserve chairman Alan Greenspan and Treasury Secretary Robert Rubin. (Lawrence Summers also opposed the request), but it was Rubin, Greenspan and Levitt who ran the well-oiled resistance machine against Born's calls for regulation of the derivatives market, saying that any such efforts would create legal uncertainly about derivative instruments and could destabilize what had become a significant global financial market, in addition to the usual cries about how new regulation might stifle innovation and could result in moving these instruments offshore.

If all of this sounds vaguely familiar, welcome to back to the future redux.

Unfortunately, Born didn't prevail and Congress stripped the commission of any regulatory authority:

Congress inserted something into an agriculture bill that temporarily prevented her agency from taking regulatory action over the derivatives market. Beaten, Born left the commission in 1999.

A year later, Congress passed the Commodity Futures Modernization Act, which took away any power of the agency to regulate over-the-counter derivatives.</i>

This is a snippet of Born's congressional testimony on the need to regulate derivatives:

“Losses resulting from misuse of OTC derivatives instruments or from sales practice abuses in the OTC derivatives market can affect many Americans. Many of us have interests in the corporations, mutual funds, pension funds, insurance companies, municipalities and other entities trading in these instruments.”

Additional information about Brooksley Born is available here, here and here.

AIG bonuses as diversion

ProPublica does a nice job of tracing the timeline of AIG bonuses and points toward one of two larger problems:

In some respects, the sudden anger is mystifying. After all, there’s nothing new about the bonuses except that a portion of them – $165 million – were actually paid on Friday. Contracts instigating the bonuses were made a year ago, and they’ve regularly been in the news in recent months.

And the amount involved is dwarfed by the tens of billions that flowed to banks and hedge funds.

Former Governor Eliot Spitzer agrees, asking why AIG's partners in the mortgage meltdown mess are getting to double-dip taxpayers:

And who were AIG's trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.

It all appears, once again, to be the same insiders protecting themselves against sharing the pain and risk of their own bad adventure.

Seriously, $165 million is .001 percent of the TARP money AIG has received. 

Sure I understand the anger over giving taxpayer bonuses to executives that sank the company, but shouldn't we and Congress stay focused on the bigger issues: Where did the big chunk of TARP money go? Why were companies that had already received taxpayer funds allowed to collect additional money, funneled through AIG, at what amounts to dollar-for-dollar reimbursement, for their mismanagement and failures?

Finally, for the sane among us: here's a lawyer's view of how best to "claw back" the bonuses, using basic legal principles, something New York attorney general Andrew Cuomo has already begun and upon which Congress and the administration can expand. Under present circumstances (80 percent taxpayer "ownership" of A.I.G.) it isn't a stretch to think that the bonuses could be rescinded on the basis of the company's "functional insolvency," according to Lawrence Cunningham, a George Washington University legal scholar:                 

[snip]

There is also at least some chance, given A.I.G.’s functional insolvency and the government takeover, that these agreements may be rescinded either on the basis of impracticability or by virtue of unforeseeable and uncontrollable circumstances. A credible fact supporting both excuses is precisely the company’s huge loss last quarter. Courts excuse contract duties when governmental action essentially destroys the original purpose of a contract — and the taxpayers’ 80 percent stake in A.I.G. is a more extreme sort of governmental action than usually appears in such cases.

This Just In: Obama Is A Politician, After All

The Senate voted 80-15 yesterday in favor of granting immunity to telecoms who engaged in electronic eavesdropping under Bush Administration "information-gathering guidelines". This is the first part of a two-part vote on the bill. Sen. Barack Obama held a press conference after the vote, explaining why he favored the "reworked" FISA legislation:

Asked specifically why he's supporting the current FISA bill when he'd promised months ago to support a filibuster of an earlier version of the bill, Obama suggested flat out that "national security" overrides the question of telecom immunity...

[snip]

Obama's line on national security here seems to be affirmation of something that many understood already: That he will support the bill even if telecom immunity isn't stripped from it, despite his promise to try to get immunity out of the legislation. If the issue of telecom immunity doesn't override national security, he'll of course vote for the bill with or without it.

Happy 4th of July! - Part III

Ah, the Swedes. So insistent about little things - like freedom, privacy, civil liberties. So committed to ensuring that their civil liberties remain intact. Granted, Sweden is a lot smaller than the U.S. Still, the fact that a majority of Swedish citizens understand the threat posed by unwarranted eavesdropping/snooping and will take action about it is encouraging. We have a role model:

Happy 4th of July! - Part II

I received an e-letter from Jay Inslee yesterday regarding his position on FISA. Rep. Inslee represents Washington's First Congressional District and is thus my representative. He is also a terrific representative and legislator.

I am especially proud of the fact that he voted no on the 2008 FISA Amendments. Here is his brief statement from CR:

Enough With The Roe v. Wade Arguments

Since Hillary Clinton conceded the Democratic nomination on June 7, I have read at least two articles a day by progressive bloggers telling Democratic women why it is in women's best interests to vote for Barack Obama. Of the numerous articles, these six are the most representative arguments.

In every case these purveyors of wisdom alternately chide us, berate us for being angry at the media, the Democratic Party system, and its leaders, and lecture us about throwing away our Freedom of Choice if we do not do the right thing and vote for Barack Obama.

First, let me get something out of the way: I'm a proponent and advocate of ensuring women's reproductive rights.

Pride Around The World 2008

A few highlights from Pride events. There are a couple of unusual stories, some surprises, and news about prejudice and hatred that still exists toward LGBTQs.

PRIDE NYC:

The largest of the pride celebrations in the United States, more than one million people attended today's gay pride parade in New York, which commemorates the anniversary of the 1969 Stonewall Riots.

[SNIP]

This is a particularly memorable year for New Yorkers as newly appointed NYC Gov. David Paterson recently ruled that New York will recognize same-sex marriages from other states.

(Re)United In Unity

"She rocks!"

These were the words shouted by a very enthusiastic Hillary Clinton supporter yesterday in Unity, NH to mark the celebrated joint appearance of Clinton and Barack Obama.

How About A Woman For MTP?

Over at the White House Project, Marie Wilson & Co. have another great idea: how about a woman to moderate MTP?

I think it's a terrific idea. Their blog, "Change Everything" asks readers for names - which will be forwarded to NBC.

Obama Is Just A Politician After All: PART II

It's been a rough couple of days for the O-godosphere (Obama's online cheerleaders). First he makes a political calculation to abandon public financing so that he can use his own online ATM (otherwise known as "small donors"). Then he capitulates on a reworked FISA bill, which was passed by the House of Representatives on Friday.

Obama is at least old enough and smart enough to know that his decisions must, of necessity, be political; that they are frequently the best-available and best-intended compromises; and that this is how the world works (more often than not). His young supporters do not know this.

Obama Is Just A Politician After All: PART I

To paraphrase Larry Johnson's post from yesterday, it's been somewhat painful to read and hear liberal bloggers' outcries over Barack Obama's statements last week to forego public financing and, more importantly, his acceptance of a reworked FISA law, which was passed by the House on Friday.

Frankly, I'm amused to see the level of apoplexy among so-called progressive bloggers over Obama's abandonment of principle, capitulation to politics-as-usual, and political calculation. Many of them are shocked, shocked! to learn that Barack Obama is, after all, just a politician.

New Polls, Intriguing Findings

New polls are out. The "horse race" polls are, in the main, nothing new, with the exception of the latest Newsweek poll, which strikes me more as an outlier, compared to daily tracking poll numbers that are probably closer to truth.

First, the horse race numbers.

To start things off, the Newsweek poll shows Obama with a whopping lead over McCain:

... new NEWSWEEK Poll shows that he has a substantial double-digit lead, 51 percent to 36 percent, over McCain among registered voters nationwide.

[snip]

Obama's current lead also reflects the large party-identification advantage the Democrats now enjoy—55 percent of all voters call themselves Democrats or say they lean toward the party while just 36 percent call themselves Republicans or lean that way.

Hillary Clinton: Our New Populist-Feminist Heroine

Blogs and news sites are buzzing about John Heilemann's excellent profile of Hillary Clinton in this week's issue of New York Magazine.

Above all, Heilemann's article is real journalism and not the slash-and-burn, take-down, smackdown variety of "news" practiced by Chris Matthews, Keith Olbermann, MSNBC, FOX, and so many others.

CA Marries Lesbian Activists Martin And Lyon

Two of the nation's best-known lesbian activists enjoyed a big first yesterday. Phyllis Lyon, 84 (seated) and Del Martin, 87 became the first lesbian couple to marry under California's gay marriage law, which was upheld by the state Supreme Court last month.

Al Gore's Endorsement: My Take

Even in political blogs and among online political chatterboxes, Gore's endorsement today didn't generate the same buzz that John Edwards' endorsement did. It was very low-key, generating at most a paragraph or two:

ABC News' Sunlen Miller and Nitya Venkataraman Report:

Former Vice President Al Gore will endorse Sen. Barack Obama Monday night in Detroit, appearing on stage alongside the presumptive Democratic nominee for the first time in the 2008 election cycle.

Obama Says No Privatization Of Social Security

Barack Obama would change the way payroll taxes are levied for Social Security, eliminating the tax on wages between $102,000 and $250,000, but re-assessing it on incomes of $250,000 or more annually.

COLUMBUS, Ohio — Democratic Sen. Barack Obama on Friday called for higher payroll taxes on wage-earners making more than $250,000 annually, a step that would affect the wealthiest 3 percent of Americans.

Democratic Party Kumbaya, Anybody? Hello! Hello!

Not everybody in the Democratic Party is ready to make nice and unify.

Take some of Hillary Clinton's top fundraisers, who held a meeting on Thursday with Obama Campaign manager, David Plouffe. The sit-down was cordial; lots of questions were asked and answered; several fundraisers volunteered to host parties and other events for Obama and the Democratic Party. But not all:

Clintons' Statement On Death Of Tim Russert

Statement of Senator Hillary Rodham Clinton and Former President William Jefferson Clinton on the Death of Tim Russert

“We were stunned and deeply saddened to hear of the passing today of Tim Russert.  Our thoughts and prayers are with his wife Maureen, his son Luke, his father who we all have come to know as Big Russ, his extended family and all of his many friends and colleagues at NBC who have suffered a tremendous loss.  Always true to his proud Buffalo roots, Tim had a love of public service and a dedication to journalism that rightfully earned him the respect and admiration of not only his colleagues but also those of us who had the privilege to go toe to toe with him.  In seeking answers to tough questions, he helped inform the American people and make our democracy stronger.  We join his friends, fans and loved ones in mourning his loss and celebrating his remarkable contribution to our nation."

"Meet The Press" Moderator Tim Russert Dead At 58

Tim Russert, longtime moderator of NBC's "Meet The Press" collapsed and died yesterday at NBC's Washington Bureau office. He was wrapping up taping for his Sunday show.

President Bush, along with the two main presidential candidates, Sens. John McCain and Barack Obama praised Russert:

"Tim was a tough and hard-working newsman. He was always well-informed and thorough in his interviews. And he was as gregarious off the set as he was prepared on it," Bush said.

Speaking to reporters in Columbus, Ohio, Obama said, "There wasn't a better interviewer in television, not a more thoughtful analyst of our politics."

McCain said: "Tim Russert was at the top of his profession. He was a man of honesty and integrity. He was hard, but he was always fair."

CNN and MSNBC suspended regular programming, and NBC Nightly News with Brian Williams devoted most of its broadcast to tributes from journalists and friends of Russert. Tributes have also been written by writers at many of the nation's leading newspapers and magazines, including U.S. News & World Report, the Wall Street Journal, Barron's, Time, Reuters, Associated Press, the Los Angeles Times, Newsweek, Forbes, The Village Voice, and both of Seattle's dailies.

Russert is survived by his wife, Vanity Fair writer Maureen Orth, and their son, Luke, who had just graduated from Boston College. The family had just returned from a trip to Rome. Russert was 58. News reports indicate that he died of a coronary embolism, but an autopsy is pending.

Condolences to Russert's family, friends and colleagues.

Obama's Tax Plan Good For Low & Middle Class

It pays to read.

I found this nugget posted yesterday at The Carpetbagger Report. Because I'm sort of a geeky person and frequently like to (try to) wrap my head around economics (it was one of my favorite subjects in college!), I followed their link to this blog, which provides some helpful non-geek speak on tax policies. The bottom line difference between a John McCain tax policy and a Barack Obama tax policy is this:

Bush (& Company) World

"I could have used better rhetoric":

John McCain's Bad Day

It Was a Two-strike Plus Day For John McCain:

The Toxic Mix Of Religion And Politics

This is only June. We have five months to go before the GE.

But the public has already been treated to a toxic mix of religion and politics, starting in February with the Rev. John Hagee's endorsement of John McCain (which was subsequently withdrawn after Hagee's comments "that Adolf Hitler had been fulfilling God's will by hastening the desire of Jews to return to Israel in accordance with biblical prophecy").

Then in March, we met - in earnest - Barack Obama's former pastor, Rev. Jeremiah Wright, of Trinity United Church of Christ in Chicago, whom Obama later "denounced" after Wright made an even bigger spectacle of himself at the National Press Club in Washington, D.C.

Now, presumptive Democratic nominee Barack Obama is actively "reaching out to" the religious community (again):

Draining The Ocean...Part II

Well, maybe we are making a small dent in sexism and misogyny after watching the performance of media professionals (and others who will go unnamed but fall under the general heading of Liberal/Progressive) during the primary campaigns. News articles over the past four days have been filled with story after story about not only the depth and breadth of sexism and misogyny displayed, but the admiration and respect Clinton has earned - even among detractors. Some examples:

Misogyny And Anger

I got into a discussion the other night with a poster at Salon.com, after reading Joan Walsh's excellent article on Hillary Clinton's "concession" speech.

There are several articulate women at Salon who are more than a little ticked at the way Clinton was treated during the primary season. Several more women who regularly post letters/comments at Salon have written that they refuse to fall in line and support Barack Obama for POTUS, for which many men are giving them great grief.