Corporations as persons? Pigs get fat; hogs get slaughtered. Or do they?

Today, five members of the United States Supreme Court had their fun pretending that their hands were tied and that they were forced by objective reasoning to rule that corporations have the same right to participate in the political process as natural persons. I strenuously disagree. Today's ruling of Citizen's United v. Federal Election Commission is extremely dangerous to our democracy. Many commentators are burning up the Internet with their written thoughts. I had previously posted on this case, citing to comments by the lawyers representing the two sides. I'll make some more comments today, based upon the written opinion. I have not read the entire opinion, but I have read enough to understand the basic contours of the ruling. What is the basis for today's ruling in Citizen's United? The majority argues that media corporations already had the practical power to say whatever they wanted, so it wouldn't be fair to deny this same power to other types of corporations. Time to throw upon the doors! The majority argues that corporations would get around campaign laws anyway, so why keep trying? The majority naively argues that independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.

Continue ReadingCorporations as persons? Pigs get fat; hogs get slaughtered. Or do they?

Hope 2.0

In light of recent political events, including the fact that "we stand on the verge of passing a giant boon to health insurance companies and calling it 'reform,'" Arianna Huffington is advocating for an empathy-driven system shattering Hope 2.0, inspired by the civil rights movement of the 1960's:

One year ago, Hope was about crossing our fingers and electing leaders that we thought would enact real change. Hope 2.0 is about using the lessons of Dr. King to create the conditions that give them no other choice.

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Simon Johnson finds tax-the-banks solution laughable

Barack Obama recently announced that the way to prevent future economic collapses is to put a new tax the big banks. For me, this was just one more in a long line of dreadful responses out of the White House. Who does he think is going to ultimately pay that tax? Further, how could a tax possibly keep big Wall Street banks from taking reckless gambles, and how is it that having a pool of tax money would mean that Washington DC wouldn't again jump in to "save the banks" with huge doses of tax dollars during the next cataclysmic crash? As long as there are banks that are "too big to fail," the federal government will jump in a most co-dependent of ways. I just read an FT.com article by economist Simon Johnson, who reassured me that my instincts were on target.

This week, the US Treasury pulled its latest rabbit out of the hat: a tax on the liabilities of large banks. The Obama administration argues that, by penalising large institutions with such taxes, we can limit their future risk-taking. This logic is deeply flawed. Why would higher funding costs mean you gamble less? If you know Tim Geithner is waiting to bail you out, you may gamble more heavily in order to pay the tax. The UK “reforms” look equally unpromising.
Johnson also spells out what IS needed:
First, we must sharply raise capital requirements at leveraged institutions, so shareholders rather than regulators play the leading role in making sure their money is used sensibly. This means tripling capital requirements so banks hold at least 20-25 per cent of assets in core capital. Second, we need to end the political need to bail out every institution that fails. This can be helped by putting strict limits on the size of institutions, and forcing our largest banks, including the likes of Goldman Sachs and Barclays, to become much smaller.
For reasons I truly don't understand, Obama is refusing to stand up and use his magnificent eloquence to make a case for meaningful financial reform. This has been a slow-motion train wreck for the past year, and he's about to allow the chance to create a CFPA slip away. He needs to join Elizabeth Warren in an almost constant assault on these highly monied amoral corporations (and their enablers in Congress) that it's time for real reform. As Warren (who IS out there fighting a good fight) says, "The problem is that a strong CFPA directly threatens the banks' ability to sell confusing, deceptive, fee-heavy financial products that generate huge profits, Warren said."

Continue ReadingSimon Johnson finds tax-the-banks solution laughable

Banks: We’ve paid you back, so we’ll now be on our way . . .

The big banks are taking the position that they have paid back most of money they received from taxpayers, so that they can go back to business as usual. Think Progress reminds us that paying back the TARP funds was the tip of the iceberg, and that the big banks are heavily in debt to taxpayers:

While most banks have already paid back their portions of TARP, as White House economic adviser Austan Goolsbee told CNBC, the government has not charged the banks for the huge emergency guarantees provided to them by the FDIC, nor for allowing investment banks to convert to deposit banks, which gave them access to loans from the Federal Reserve. Moreover, the entire sector has benefited from taxpayer help. The government has provided financial firms with trillions of dollars in low-interest loans and outright equity purchases through programs like the Federal Reserve's Discount Window and loan guarantees, and they also benefited from the bailout of AIG. TARP represents only a small portion of the total support for the financial sector, so even firms that did not receive funds under the program -- or have already paid back their portion -- owe taxpayers.
This Think Progress post is link rich, in case you'd like to dig in deeper.

Continue ReadingBanks: We’ve paid you back, so we’ll now be on our way . . .