William K. Black: It’s time for real economic reform

We are a nation in severe crisis. According to William K. Black, a white-collar criminologist, President Obama doesn't deserve any more of our patience:

The Obama administration promoted Bush's architects of the financial disaster and demands that we hail them as heroes. President Bush was ridiculed for saying: "Brownie, you're doing a heck of a job." FEMA administrator Michael Brown stood by while Hurricane Katrina reduced a single large city to ruin. Geithner and Bernanke stood by while scores of large cities were devastated.
Black offer much more than criticism. He offers ten opportunities for digging us out of this mess. It will be difficult to attain any of these while the banks own Congress, but we need to dig deeply an somehow find the political will. Here are two of Black's points that stand out to me:
Can the Wrecking Crew. Fire the senior leaders of Bush's and Clinton's financial Wrecking Crews and stopping treating them as financial experts. President Obama should not reappoint Bernanke as Fed Chairman. He should dismiss Geithner and Summers and cease to take any advise from Rubin. Replace them with the Reconstruction Crew -- people with a track record of getting things right and being effective economists, regulators, and prosecutors . . . End "too big to fail." These banks are "systemically dangerous institutions" (SDIs). They should not be allowed to grow. They should be shrunk to the point that they no longer pose systemic risk, and they should be subject to vigorous regulation while shrinking. They are too big to manage and too big to regulate. They are ticking time bombs that will cause recurrent global crises as long as they are SDIs.
Here are some of Black's other suggestions. I agree with all of them whole-heartedly: - We need to provide the FBI with 1,000 more specialized white-collar crime investigators. - No more executive compensation looting. - Kill TARP and PPIP. ("Use the funds to help honest homeowners that would otherwise lose their homes because of predatory loan terms.") - Make the Federal Reserve System public. - Defeat any proposal to make the Fed the "Uberregulator." - Create a robust "Consumer Financial Product Agency. - End the waste of long-term unemployment (Instead, of paying them to do nothing, pay them to do public works) Consider, also, Black's Five Fatal Flaws of Finance.

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We’re another step closer to auditing the Federal Reserve

This has been a long time coming. The Federal Reserve has never been audited. Ever. The House has now moved us a step closer to shedding real light on all of the secret deals:

The measure, cosponsored by Reps. Ron Paul (R-Texas) and Alan Grayson (D-Fla.), authorizes the Government Accountability Office to conduct a wide-ranging audit of the Fed's opaque deals with foreign central banks and major U.S. financial institutions. The Fed has never had a real audit in its history and little is known of what it does with the trillions of dollars at its disposal.

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When do the prosecutions begin?

In the St. Louis alternative newspaper, The Riverfront Times, James Lieber sizes up the prosecutions now underway for the economic collapse. Oh, wait. There aren't any prosecutions:

As it stands now, there is only one federal prosecution related to the credit crash and bailout cycle, and it was begun by the Bush administration's Justice Department in June 2008. Not that there aren't culprits. Bernie Madoff and other accused Ponzi schemers like Allen Stanford are mere pickpockets compared with Wall Street's institutional buccaneers, who so far have carted off up to $12.7 trillion — that's nearly equal to the entire gross domestic product. They've multiplied their booty with billions in subsidies and a flood of derivatives — some of them merely old soured wine in new bottles. Today's pirates are sailing away from the light regulatory scrutiny that apparently will continue in our benighted, weakened, financially top-heavy and bubble-addicted economy. [Former regulator William] Black says Obama's current efforts are doomed to fail — and, in a twist, it's for lack of trying. "There is not a single successful regulator giving him advice," Black notes.
I've posted about William Black previously. Lieber describes him as follows: "a Ph.D. criminologist and lead lawyer at the Office of Thrift Supervision, who helped steer the brilliant federal effort that cleaned up the S&L industry and won more than 1,000 felony convictions of senior insiders while recovering millions of their ill-gotten dollars." Black is someone to whom Obama should be listening. He states that there are two reasons why there aren't vigorous ongoing prosecutions resulting from this collapse 1) "It's difficult to prosecute others for securities fraud if you condoned the deals to begin with," and
2) Obama administration lacks the will. Obama was the candidate most preferred by Wall Street and he has surrounded himself with lackeys for big finance, including not only Lawrence Summers and Tim Geithner, but also Attorney General Eric Holder, who has made it clear that white collar crime is something which he'd rather not prosecute. Keep in mind that "Wall Street's institutional buccaneers [have] so far have carted off up to $12.7 trillion, and that in 2008, In 2008 American households lost 18 percent of their wealth. Why aren't there more prosecutions? There's no good reason. This is an excellent in-depth article. The title: "No Justice: We've bailed out the banks. When do we go after the crooks behind our financial collapse?"

Continue ReadingWhen do the prosecutions begin?

What does this say about the government we support in Iraq?

Yes, Blackwater paid a million bucks to bribe Iraqi officials to placate those officials and thus allow Blackwater to continue garnering a huge paycheck in Iraq. Lots of people are rightfully pissed at Blackwater. But what does this say about the Iraqi government that more than 3,000 U.S. soldiers died to establish? Imagine this in 2003: Dick Cheney tells the public that we're going to spend one trillion dollars and allow 3,000 U.S. soldiers to die in order to establish a corrupt Iraqi government when we don't actually know whether Iraq has any plans to attack the United States. How much support would there have been for that kind of needless military adventure?

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Tear up the health care bill and start over.

I wrote a comment on this same issue last night, but I wanted to make it into a post as well, given the importance. Marcia Angel, M.D., former editor of the New England Journal of Medicine, is highly critical of the proposed "health care reform." Although she admits that it accomplishes a few things, it is worse than doing nothing.

It throws more money into a dysfunctional and unsustainable system, with only a few improvements at the edges, and it augments the central role of the investor-owned insurance industry. The danger is that as costs continue to rise and coverage becomes less comprehensive, people will conclude that we've tried health reform and it didn't work. But the real problem will be that we didn't really try it.

Read the full post at Huffpo for Angel's clear and understandable ideas for meaningful (and not corrupt) health care reform. I agree with Angel that the current bill is an industry-coddling joke and that it is worse than doing nothing, for the reasons she offers. The House bill has a few pieces of low hanging fruit (e.g., portability), but at great unnecessary expense and waste. We need to tear up this celebrated new bill (celebrated by the Democrats, anyway) and start over. For more on Angell's ideas for reform, also see her recent appearance on Bill Moyer's show.

Continue ReadingTear up the health care bill and start over.