Category Archives: Amodei

Deflection, Distraction, and Destruction: Trump & the GOP

“…this is exactly what Trump does when he’s in trouble. He finds an enemy and punches as hard as he can.”  [WaPo]

Now, why is he in trouble? And,  what will happen today in Reno at the American Legion convention?  Additionally, who will be standing with the President at the closed to the public event?  The Nevada Independent, which if you’ve not already bookmarked you should, reports: (1) Adam Laxalt, Tea Party Darling will gleefully meet the President and has wrangled radical right wing VP Pence to his Basque food-fest; (2) Dean Heller, maybe not so much but then he won’t say — so what is new about the Heller rope-a-dope strategy? (3) Mark Amodei (R-NV2) showed up Tuesday and may have skedaddled? “A spokeswoman for Amodei did not respond to a follow up question as to whether or not the congressman would meet with Trump while the president is in Reno.” (4) Governor Sandoval appears to be adopting the Republican Gubernatorial Avoidance Strategy — meet him at the airport and then scamper off out of sight thereafter.  If the crowd is thinning, then why the Great Counter Punch?

What makes the President go into full attack mode?  What sends him off on tangents about white supremacy, statues of CSA ‘heroes,’ and “the Media?”  There’s a pattern, the deflection and distraction flare as the investigation of his connections to the Russians progress.

Why did he fire former FBI Director James Comey? Why was he upset with A.G. Jeff Sessions?  Why did he hammer Sen. Mitch McConnell? — Why the “profane shouting match?

“During the call, which Mr. Trump initiated on Aug. 9 from his New Jersey golf club, the president accused Mr. McConnell of bungling the health care issue. He was even more animated about what he intimated was the Senate leader’s refusal to protect him from investigations of Russian interference in the 2016 election, according to Republicans briefed on the conversation.”

What happened prior to August 9, 2017 that’s increased the need for deflection and distraction?

On August 1, 2017 PBS reported that the President dictated the message delivered by his son concerning the meeting at Trump Tower during the campaign with a small host of Russians who were very interested in “adoptions” (read: getting rid of the Magnitsky Act sanctions.)  The President’s assertions that the investigation is fake news and a witch hunt cracks a bit when it’s known that HE was aware of the trouble his son was in for taking and arranging that meeting.  On August 3, 2017 the President grudgingly signed the new Russian sanctions bill dictated by Congress. No fanfare, no ceremony, and two explanations or signing statements.  That was the same day the Wall Street Journal reported that Special Counsel Robert Mueller had impaneled a grand jury in the District of Columbia.

Senator Richard Blumenthal (D-CT) spoke out in support of the Grand Jury, and Mr. Mueller’s continuing investigation of all matters related to Russian interference, and thereafter was rewarded by a “tweet storm” of abuse from the President, reported on August 7th.  The Special Counsel investigators raided the home of former Trump Campaign manager Paul Manafort on August 9.  They were looking for tax documents and foreign banking records, and since they didn’t merely ask Manafort’s legal team for them we can safely assume Mr. Manafort was (a) not as cooperative as his press comments made him out to be, and (b) in possession of things he might very well want to destroy before they landed in Mr. Mueller’s hands.

Events in Charlottesville, VA on August 12 and 13, 2017 intervened to capture public attention as Neo-Nazis and white supremacists took center stage, and as the President waffled about who might have been “responsible.”  Presidential commentary about “history” and “heritage” as if they are synonymous deflected and distracted from the continuing Russia probe.

Fast forward to August 22, 2017 on which it is revealed that the “Trump Dossier” re-emerges into the public consciousness.  Spokespersons for the President have tagged the dossier as “unsubstantiated,” “debunked,” or “unproven” as a general matter, without noting that individual contentions within the document are still under investigation.  The president of the company underwriting the dossier has now spent an entire working day with the staff of the Senate Judiciary Committee.    Interestingly enough, the President chose to spend a significant amount of his time during a campaign rally in Phoenix on August 22nd railing about “fake news” and the “unfair media.”

Those dismissing the dossier as “debunked” may be a bit premature.  The origin of the dossier investigation lies within the “never Trump” wing of the GOP, and after Trump secured the GOP nomination the Clinton Campaign was interested in the contents.  For a “debunked” piece of investigation it’s certainly had an impact, and the FBI now has information from the author about his sources, again as of August 22nd.  If some of the allegations in the Steele Dossier can be sourced, investigated, and substantiated, then the generalized “debunking” portion of the President’s defense can start to crack.  And, we wonder why he spent an inordinate amount of time denouncing the media on the evening of August 22, 2017?  Deflection and Distraction?

Perhaps now this paragraph concerning the cracks reported by the New York Times in the McConnell/Trump relationship makes more sense:

“During the call, which Mr. Trump initiated on Aug. 9 from his New Jersey golf club, the president accused Mr. McConnell of bungling the health care issue. He was even more animated about what he intimated was the Senate leader’s refusal to protect him from investigations of Russian interference in the 2016 election, according to Republicans briefed on the conversation.”

Why would the President become “more animated” about Senator McConnell’s purported failure to “protect” him?  Does the President demand Senator McConnell “protect” the President from the Senate Judiciary and the Senate Select Committee on Intelligence?

Protect him from What?  Destruction?  The gamble for Republicans — from reluctant Senator Heller to enthusiastic Adam Laxalt — is whether to hitch their political futures to the distraction/deflection tactics of the current administration or cut loose and hope he doesn’t lead them to destruction.

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Filed under Amodei, Heller, nevada taxation, Politics, Republicans

Amodei: Several Days Late and More Dollars Short

So, Representative Mark Amodei (R-NV2) spent time with reporters to talk about (1) Race relations in America? — uh, that would be “no.” Or, (2) American strategy in the Middle East and South Asia? — no, not that either. Perhaps it was (3) Infrastructure investment and jobs programs?  — no, that didn’t form a major part of his remarks. Maybe it was (4) tax reform, or at least tax cuts?  — well, that wasn’t a focal point either.  He wanted to talk about health insurance, “repeal and replace,” as if the GOP hadn’t bungled its strategy and tactics to an extent that was truly remarkable in modern politics.

Never one to climb out on even the sturdiest branch and get ahead of the game, or even to keep up with the topics at hand, Representative Amodei continues to play the “repeal and replace” tune without acknowledging that his party had seven years to come up with a viable, specific, and practical PLAN to replace the Affordable Care Act.  Not to put too fine a point to it:  They Blew It.   However, this doesn’t prevent the Representative from belaboring the issue, rather like listening to someone who persists in telling us what he did on Labor Day during the New Year’s Eve party.

 

 

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Filed under Amodei, Health Care, health insurance, Nevada politics, Politics

Amodei, Your Banker’s Best Friend

House Roll Call Vote 412 wasn’t one of those votes likely to draw much general media attention, even its title seemed designed to induce yawns: “Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by Bureau of Consumer Financial Protection relating to “Arbitration Agreements.”  Representative Mark Amodei (R-NV2) voted in favor of this measure on July 25th, and few noticed, much less commented.  It’s a small thing, but indicative of a mindset that favors the Big Banks over the interests of American consumers.

Background

 “In May 2016, the CFPB issued a proposed rule prohibiting predispute arbitration agreements in providing consumer financial services products. This rule would prohibit mandatory predispute arbitration agreements in consumer agreements for items such as checking or savings accounts, credit cards, student loans, payday loans, automobile leases, debt management services, some payment processing services, other types of consumer loans, prepaid cards, and consumer debt collection. The rule would also prohibit predispute arbitration agreements in connection with providing a consumer report or credit score to a consumer or referring applicants to creditors to whom requests for credit may be made.” [ABA]

Translation:  For “predispute” read Day in Court, as in the rule prevents a financial corporation from requiring arbitration before a person can take his or her case to court as a member of a group of consumers who have been hurt by the financial institution’s action or actions.   The Consumer Financial Protection Bureau explained:

“Many consumer financial products like credit cards and bank accounts have contract gotchas that generally prevent consumers from joining together to sue their bank or financial company for wrongdoing. These widely used clauses leave consumers with no choice but to seek relief on their own – usually over small amounts. With this contract gotcha, companies can sidestep the legal system, avoid accountability, and continue to pursue profitable practices that may violate the law and harm countless consumers.”  (emphasis added)

And, Representative Amodei supported the legislation to disapprove of this rule which was an attempt to protect consumers from actions like the following:

The poster child of bank malfeasance, Wells Fargo’s  —  “admitted its employees systematically created millions of sham bank accounts in its customers’ names, and then in many cases fraudulently billed those same customers for fees and services they never agreed to. Executives of the megabank knew this was happening but did nothing. Then, they decided to blame 5,300 “rogue” employees, who were summarily fired. Now, to ward off thousands of lawsuits, the company is hiding behind binding arbitration clauses in its victims’ contracts.” [USNWR]

And, there’s this —

“Military readiness has been negatively affected by unscrupulous payday lenders who prey on military servicemembers and veterans. The victims become overly indebted thanks to exorbitant interest rates and hidden fees they don’t understand, and then find themselves unable to obtain relief thanks to forced-arbitration clauses. Because of this, the Military Coalition, which represents nearly 6 million uniformed service members, veterans and their families, has formally petitioned Congress to ban the clauses.”  [USNWR]

It’s hard to imagine siding with unscrupulous bankers against the interests of enlisted personnel who are in the E6 to E9 ranks  in which pay runs from $2,486.99 to $4,186.09 for a person with more than eight years service, however Representative Amodei found a way to do it.  The problem became such a persistent issue for the military that in 2007 the Department of Defense started enforcing the Military Lending Act to protect its service personnel. However, pay day lenders found loopholes such that they could re-introduce their ‘products’ to members of the military. [MrktPlc] Who would support legislation designed to force members of the Armed Services to accept arbitration before they could have their day in court?  Representative Mark Amodei (R-NV2) and his Republican cohorts in the 115th Congress.

What makes this vote particularly noticeable regarding the protection of bankers is that there are ways — at least two — to ‘prevent’ that bete noir of all Republicans, the consumer lawsuit, without pitching the baby out with the bath water.

The first way would be to make all arbitration voluntary.  Companies could save time and money, and avoid publicity IF the consumer agrees.  If there is no agreement then the case goes to court.

The second possible solution would be to put the arbitration on a “business pays” status.  The American Bar Association offers this common sense proposal:

“The CFPB should require any consumer arbitration to be fully business-funded at no cost to the consumer. When a business faces transaction costs of nearly $2,000 per arbitration filed, repeat consumer filings will attract its attention. In addition, the CFPB could consider requiring that any consumer arbitration which results in a favorable consumer award on the merits should be awarded treble damages and attorneys’ fees. This provision would include a sort of “built in” incentivizing provision. The goal of this provision is to encourage organically what we already see occurring, increased settlement of consumer disputes. Still further, the CFPB should require that any consumer arbitration award must result in a written statement of decision, which permits other consumers to know how the arbitrator applied the law to the facts of that case. This will facilitate consumer knowledge of potential corporate overreach (and encourage more recovery), and will also help aid the consumer in arbitrator selection.”

In short, it is not necessary to go full-bore all-out in support of the banksters among us in order to prevent the unscrupulous from skinning the unwary or uninformed, but that’s what Representative Mark Amodei did on July 25, 2017.

Perhaps this may be explained by the fact that as of May 2017 Representative Amodei received $8,000 in donations from commercial banks for this election cycle, another $7,000 from credit unions, and $1,000 from finance and credit companies.  Or maybe it relates to the $25,000 he’s collected from the American Bankers Association over his political career?  Whatever the motivation, it’s clear that Representative Mark Amodei is placing the interests of the bankers above those of American consumers.   This situation could be rectified in 2018.

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Filed under Amodei, consumers, Economy, financial regulation, Nevada economy, Nevada politics, Politics

Rep. Mark Amodei: We Don’t Have Enough Corporate Money in Politics?

Nevada’s own Rep. Mark Amodei (R-NV2) may believe there isn’t enough corporate money in politics — On April 17, 2017 he introduced H.R. 2101, the Prior Approval Reform Act, which would make it easier for business trade associations to make political contributions.  Ah, just what we need! More corporate money in our political system!

The bill has the blessing of the Association of General Contractors, which posted the following argument on line in May, 2017:

“This legislation would repeal the prior approval requirement that is unfairly imposed upon and discriminates against corporate-member trade association PACs, like AGC PAC.

As you may know, the Federal Election Campaign Act requires the political action committee (PAC) of a trade association with corporate members, like AGC of America, to obtain prior approval in writing from a member corporation before communicating detailed information about the PAC and/or soliciting its executive or administrative staff. Furthermore, the regulation states that a corporate member may approve solicitations by only one trade association per calendar year.

AGC members have a constitutional right to join together in support of or in opposition to candidates for political office. Requiring prior approval discourages our members from participating in the association’s PAC, and creates an unequal playing field that restricts your First Amendment rights to free speech.”

Oh, the horror — “burdensome regulations” which seek to limit corporate political activities like soliciting money from members for advertising campaigns.  Notice please that nothing in the rationale posits that trade associations are not allowed to indulge in money gathering and expenditures — only that they have to get prior approval.  They certainly aren’t forbidden from engaging in PACs, the post only asserts that the corporations find this regulation ‘discouraging.’

The contractors take their argument a step further in this letter to House Speaker Paul Ryan: (pdf)

“Trade associations, like AGC, are discriminated against because their PACs are the only political committees that must first obtain exclusive permission from member companies before soliciting eligible individuals for support. No other class of PAC, including corporate, labor union, and individual membership association, is subject to the prior approval requirement. The requirement also restricts the First Amendment rights of AGC member company employees. The hardworking men and women in the construction industry are often frustrated that their company must first grant permission before they can be asked to make a personal contribution. It makes no sense that they can be solicited by individual member PACs and outside groups, but not by the trade association in which they participate unless their company provides its permission. Members of AGC have a constitutional right to join together in support of, or in opposition to, candidates for political office.”

Humm, a “hardworking” person in the construction sector can’t be solicited for a contribution unless the member company approves.  Let’s take a look at the trade associations which would benefit from this “reform,”  the list would include the following — America’s Health Insurance Plans, the Alliance of Automobile Manufacturers, CTIA the Wireless Association, Aircraft Owners and Pilots Association, The Internet Association (Facebook, Google, Amazon), Securities Industries and Financial Markets Association, National Association of Federal Credit Unions, Global Automakers, Growth Energy, Airports Council International, Airlines for America,  International Franchise Association, the American Medical Association, Motion Picture Association of America, US Chamber of Commerce, American Chemistry Council, US Travel Association, National Federation of Independent Business, Interstate Natural Gas Association, Business Roundtable, Nuclear Energy Institute, American Gaming Association, National Retail Federation, Independent Petroleum Association, Information Technology Industry Council, American Petroleum Institute, National Association of Realtors, American Bankers Association… if these are the top trade association lobby organizations in Washington, D.C. it’s hard to see precisely how these powerful outfits are “discouraged” from political participation by a “burdensome” regulation that requires them to get permission from their components before soliciting donations from their employees.

What we have here, compliments of Nevada Representative Mark Amodei, is yet another proposal designed to insert even more corporate money into the American political process.  Thus much for representing the “little guy.”

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Filed under Amodei, Nevada politics, Politics

ICYMI: In Case You Missed It, Instant Summer Reading Recommendations

The Nevada Independent has several excellent articles about the health insurance ‘reform’ battle in the state,  I’d recommend starting with ‘Senator Cortez-Masto’s denunciation of the Senate health bill,” and move on to ‘Dispatches from Washington.’

The Reno Gazette Journal reports (video) on Rep. Jacky Rosen’s (D-NV3) decision to run for Senator Dean Heller’s seat.

Please note TPM’s report from the conference of Secretaries of State concerning election data security.  If this conclusion doesn’t disturb us, it should:

“But both Republican and Democratic Secretaries of State, who are responsible for carrying out elections in many states, said they have been frustrated in recent months by a lack of information from federal intelligence officials on allegations of Russian meddling with the vote. They say that despite the best efforts by federal officials, it may be too late in to make substantive changes.”

Interestingly enough, vote suppression advocate Chris Kobach was a no-show at the meeting.  Perhaps this is because some election experts have identified major flaws in Kobach’s “election integrity” plans.

And, now we get to “muddle time” during which the current administration tries to muddy the waters about the  other election problem — Russian interference.  Spokespersons and advocates are on the air-waves saying that “Gee, it’s not 17 intelligence agencies, it’s actually just a handful of people who reached the conclusion that the Russians meddled,”  which is one tactic to discredit the reports that are unequivocal in their assessment that, yes, the Russians interfered.   Following this comes the Gee Whiz moment in which the apologist who says that “we’ve not actually seen the evidence of this.”  A statement such as this is simply a variation on the previous talking point:  We’ve investigated this enough, there’s nothing there, move along please.

Speaking of elections, please take a look at the bill introduced by Rep. Mark Amodei (R-NV2) HR 2101, the Prior Approval Reform Act:  To amend the Federal Election Campaign Act of 1971 to expand the ability of trade associations to solicit contributions from the stockholders and executive or administrative personnel of their member corporations, and for other purposes.  The effective date, January 1, 2018, would allow more “corporate” money in politics just in time for 2018 campaign season.   The Associated General Contractors would be pleased to see this enacted. [pdf]  Those disturbed by the dark, and darker money, flowing into our campaigns should track this bill.

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Filed under Amodei, Health Care, health insurance, Heller, Nevada politics, Politics, Vote Suppression, Voting

Amodei’s Bubbles: Republican Dreams for the AHCA

Nevada Representative Mark Amodei (R-NV2) is eager to let his constituents know that the District will not be negatively impacted by the GOP health insurance/tax cut bill currently being drafted in secret on Capitol Hill.  Not. So. Fast.

First, there will be losses.  Total coverage losses are projected to be felt by 37,500 under the AHCA, and 5,700 of those will be children, another 700 are disabled individuals in District 2.   Representative Amodei is optimistic about what will happen to these constituents —

Any Nevadan who has enrolled in the expanded Medicaid program from its inception in 2014 through the end of 2019 is free to remain in the program so long as their income does not exceed 138% of the national poverty level; …

In short, according to Rep. Amodei, his constituents are to be carefree and happy about their health insurance coverage until the end of 2019.  It’s now 2017.  Thus the recipients are to be reassured for another two years because:

  • Nevada will continue to receive the enhanced federal Medicaid funding for enrollees that it is currently receiving for as long as that enrollee stays in the program;

  • Present expanded enrollees lose eligibility only if they exceed income of 138% of the national poverty level, or if they elect to take employer provided or private health insurance;

Lovely, until we peek into the House version (the basis for the Senate version) and find:

“Medicaid provides coverage for over 70 million individuals and relies on both federal and state funding to continue growing. Under current law, the federal government covers, on average, 57 percent of each state’s total Medicaid costs, no matter the amount. The states pay for the remainder.

In contrast, under the AHCA’s per capita cap Medicaid program, starting in 2020, the federal government would provide states with a flat, capped dollar amount of funding for each person they enroll. The dollar amount is based on states’ 2016-level per-enrollee spending.”

One way to interpret this is that the District’s enrollees will be fine for the moment, but should be aware that the sword labeled ‘the Medicaid Per Capita Lid’ is swinging over head.  This has the potential to burst the first of Amodei’s bubbles.

Secondly, there’s this part of Representative Amodei’s eternal optimism:

“While we understand that Medicaid Expansion will eventually be phased out, we expect the recovery of our economy to continue, giving us reason to believe we will not need as robust of a safety net as we once needed at the height of the recession.  Additionally, with Nevada leading the nation in job growth in 2016, we also can expect employer-based coverage to become available to more people.”

A bit of confusion reigns here — don’t worry about Medicaid expansion cuts because Nevadans will be covered — but notice that the Medicaid expansion will “eventually be phased out.” One really doesn’t get to have it both ways.  But, there’s more.

Yes, the Gallup 2016 Job Creation Index gives Nevada top marks for job creation, but remember that this polling is based on asking workers if the employer is increasing hiring.   It is also statewide.  If we drill down we find positive news, but an incomplete picture.

“Employment increased in Nevada’s two large counties from September 2015 to September 2016, the U.S. Bureau of Labor Statistics reported today. (Large counties are defined as those with 2015 annual average employment of 75,000 or more.) Washoe County’s employment rose 5.0 percent and Clark County’s employment rose 3.7 percent.” [BLS]

What we are required to believe  is that employment increases in District 2 will be sufficient to cover some 37,500 people who will need to find employer paid insurance coverage by 2020.  Exactly how this is supposed to happen isn’t all that clear.

There are too many “ifs” in the proposition to adopt it with any enthusiasm.  IF there is continued employment increases — in the face of the financial deregulation legislation in the House and Senate which threaten to recreate the Wall Street Casino environment that wrecked Nevada’s economy in 2007-2008.  IF the employment increases in the rural portions of District 2 are sufficient to put Medicaid expansion enrollees into employer plans.

And then, there are the problems intrinsic in the AHCA in the employer sponsored insurance plans.  Those believing that the AHCA will deliver the same level of health insurance coverage in employer sponsored plans as the ACA may be in for a rude shock.

“The amendment (to the AHCA) would allow states to apply for waivers to rescind two major regulations of Obamacare, if the state can prove that healthcare costs would decrease as a result. That has led to concerns about its potential effects on the individual insurance market, but it could also change insurance for people that get coverage through their employers.

One of those Affordable Care Act-implemented protections — called essential health benefits (EHB) — requires insurers to cover a baseline of 10 health procedures and items including emergency-room visits, prenatal care, mental-health care, and some prescriptions.

Under Obamacare, employer plans could not place a lifetime limit on the amount that the plans pay out on EHBs, and required plans to limit the amount of out-of-pocket costs an employee had to pay annually, according to The Journal. That made plans more costly for employers but also provided better coverage for employees.”

Thus, there are three problems — junk plans might be back in the market; essential benefits can be reduced; and lifetime and annual benefit limits could be reintroduced.  We can safely assume that Representative Amodei’s analysis contains the usual measure of Trickle Down Happy Talk (if only the tax cuts are big enough all employers will hire enough people to make the magic happen! — See Kansas) and assumptions which sound superficially rationale but don’t hold up to much scrutiny.

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Filed under Amodei, health insurance, Medicaid, nevada health, Nevada politics, Politics

Deregulation isn’t the solution, it’s the problem

Representative Mark Amodei (R-NV2) was pleased to vote for the so-called “Choice Act,” which rolls back some of the reforms enacted in the wake of the Wall Street casino debacle and subsequent recession as the Great Wall Street Derivative Monster collapsed like an air dancer in a Nevada wind.   The theory behind this ridiculousness is that regulations restrict commerce, and a restriction of commerce diminishes wealth, therefore diminished wealth impacts investment, ergo diminished investment equates to a limit on economic growth.  Not. So. Fast.

Yes, regulations restrict “commerce,” but only some kinds of “commerce,” generally the fraudulent variety.  I am free to issue shares of stock in my corporation — however, I am not free to issue shares of stock in the Reese River Steamboat Company.  Some sharp soul offered shares of this highly dubious company during one of the mining booms, and assuredly some investors were cheated by this obviously fraudulent sale.  We have regulations to prevent this.  We have laws and related regulations to prevent insider trading, to prevent “blue sky” stocks, and to reduce the possibility investors are cheated by financial products which promise high returns with little or no risk.  Sometimes the adage, “If it looks too good to be true, it probably is,” isn’t quite enough to prevent mismanagement of other people’s money.

Recently, Wells Fargo was found guilty of violating regulations and laws relating to the creation of phony accounts, the fine totaled a massive $185 million and some 5,300 individuals were fired. [NYT] The situation was all the more egregious because the bank was ripping off its own customers.  $100 million of that fine was the highest penalty the CFPB ever levied against a financial institution.  This is precisely the agency the so-called “Choice Act” wants to ham-string.

The “Choice Act” would eliminate the regulation regime which was intended to prevent the collapse of banking institutions.  Just for the record, let’s look at the list of US institutions that either disappeared or were acquired during the Great Recession: New Century, American Home Mortgage, Netbank, Bear Stearns, Countrywide Financial, Merrill Lynch, American International Group, Washington Mutual, Lehman Brothers, Wachovia, Sovereign Bank, National City Bank, CommerceBancorp, Downey Savings and Loan, IndyMac Federal Bank, HSBC Finance Corporation, Colonial Bank, Guaranty Bank, First Federal Bank of California, Ambac, MFGlobal, PMI Group, and FGIC.

If we extrapolate the “let the market sort it out” argument to its conclusion — it’s acceptable to allow banking institutions to over-extend themselves to such an extent that they will ultimately collapse; that’s just the market “at work.”  Fine, if the impact of such deregulation solely impinges on the banking institutions themselves, but that’s not what happens in the real world.  In the real world such supposedly safe havens (money market accounts) were in peril:

“A little over a year ago the collapse of Lehman Brothers sparked heavy redemptions from the dozen or so money market funds that held Lehman debt securities. The hit was particularly hard at The Reserve Fund, a money market fund that had a $785 million position in Lehman commercial paper. Soon The Reserve saw a run on its Primary Fund, spreading to other Reserve funds. Reserve tried to furiously sell its portfolio securities to satisfy redemptions, but this only depressed their values.

Despite its best efforts, The Reserve Primary Fund couldn’t find enough buyers and on Sept. 16 the unthinkable happened. The Primary Fund “broke the buck,” meaning that the net asset value of the fund, $1, fell to $0.97 a share. It was only the second time a money market fund, which are commonly thought of as guaranteed, broke the buck in 30 years.”

Meanwhile in Nevada, unemployment soared to 14+%, the state endured being listed among the states with the highest levels of foreclosures, and it took until 2016 for the state to recover almost all the wealth and jobs lost in the aftermath of the deregulated Wall Street casino debacle. [LVRJ]

Deregulation may sound fine when discussed in theoretical, ethereal, terms, it obviously didn’t work in the real world in which Bear Stearns, Lehman Brothers, WaMu, and IndyMac collapsed, and where the Reserve Primary Fund “broke the buck.”

The questions someone should ask of Representative Amodei, and other “deregulators,” are:

(1) Do you favor a return to the regulatory environment in which investment banks were allowed to over-extend and engage in risk taking far beyond their capacity to remain solvent?

(2) Do you favor a regulatory environment in which those being regulated are allowed permission to “self regulate,” without oversight from governmental agencies and institutions?

The second question is particularly important because it addresses the question of trust in commercial relationships.

The most basic of all commercial relationships is the simple act of buying and selling.  I have something to sell, and there is a potential customer for my goods or services.  This is another point at which deregulation can easily become part of the problem.  If I am selling food, there are self-evident reasons for regulating the conditions under which that food is prepared and served to the general public.  Deregulation invites disasters of the public health variety.  We trust that the food offered for sale by restaurants and groceries is safe for consumption.

If I am selling financial products does the buyer (consumer) have the expectation that my product is what it purports to be?  That it is backed by sufficient funds for ‘redemption?’ That it conforms to the standards of acceptable practices?  And, if it doesn’t, are there avenues of redress such that the consumer can be compensated?  In short, can the customer be assured that he or she can trust the product?

If I am selling a manufactured product, can the consumer trust that the item was produced in a safe way, that the product will perform as advertised, that the product will not create a hazard in my home or office?  There are voices on the fringe of Free Market thought calling  for the abolition or at least the restriction of the Consumer Product Safety Commivoicssion, who would love to see the return of Caveat Emptor, but most reasonable people agree that regulations pertaining to product safety are conducive to commerce, NOT restrictive.  A vehicle which meets or exceeds safety standards is more likely to be my choice than a vehicle which does not.  A vehicle which meets or exceeds fuel consumption standards is more like to be my choice than one which does not.  In short, regulatory standards benefit the best products (and their producers) while those who do not meet the standards have a more difficult time at the point of sale.  Now, the question becomes — do we want a regulatory environment which benefits the marginal, the inadequate, or perhaps even the corrupt producers?

Unfortunately, the deregulatory voices are answering this question in the affirmative.

Is this really the answer Representative Amodei and his cohorts want to give to constituents in the Second District? In the US?  To our customers around the world?

 

 

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Filed under Amodei, banking, Economy, financial regulation, Foreclosures, Nevada economy, Nevada politics, Politics