Category Archives: Berkley

VOTE

I suppose we can assume Nevada, though Battle Born, is no longer a battle ground — when the GOP vice presidential candidate, who has been bravely seeking votes in Alabama, Texas, South Carolina, and Georgia, [AJC] is scheduled to drop into the Silver State [LVSun] it must be official.  [RGJ]

Meanwhile Real Clear Politics ranks the senatorial contest as a toss up, but with Senator By Appointment Only™ Dean Heller leading Representative Shelley Berkley (D-N1) by 3.5%.

The Nevada Democratic Party has a timely reminder: “The time is now…call 323-8683 or 870-1512 or go to barackobama.com NOW to sign up to volunteer for the final GOTV push this weekend, Monday, and/or Election Day Tuesday.”

Representative Nancy Pelosi (D-CA) commented on the October jobs report, and the importance of this election:
Americans cannot afford the Republican plan that takes us back to the failed policies that crippled our economy in the first place – unnecessary tax cuts for the wealthy, unregulated Wall Street, and unpaid-for spending. Yet, for the past two years in the majority, House Republicans – joined by Governor Romney and Congressman Ryan – have offered a repeat of this same agenda, threatening middle class security and our economic growth. Americans deserve better.”

Need information about polling places? Click HERE.  Or, for Washoe County click here.   Clark County click here.

 

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Filed under 2012 election, Berkley, Heller, Nevada, Nevada Democrats, Nevada politics

Swinging through the Swing State: Nevada Roundup

Rep. Joe “Social Security is a Ponzi Scheme” Heck (R-NV3) and his Democratic opponent John Oceguera took part in a campaign debate in which Rep. Heck, unable to speak to his record on women’s issues, took it upon himself to remind voters for the umpteenth hundredth time that Mr. Oceguera retired early as a firefighter.  [LV Sun] [Nevada Progressive]

Remember when? “At the October 11 debate, Joe Heck looked into the camera and told the audience in no uncertain terms that he supports a woman’s right to choose in cases of rape, incest and when the life of the woman is in jeopardy.  Unfortunately, his voting record does not reflect that claim.  On July 31, Heck voted for H.R.3803, a bill banning abortion care after 20 weeks in Washington, D.C. – a proposal that has no exception in cases of rape or incest.” [NRDC]

Republican Danny “Do You Recognize My Last Name” Tarkanian is pleased to tell us that ‘higher education is not a right,’ and anyway we can’t afford to help young people go to college “in this economy” (translation: because we can’t ask millionaires and billionaires to pay Clinton era tax rates). [NV Progressive]

Mr. Tarkanian also appears to have glommed onto the Balanced Budget Amendment Hoax of the Season.  Review: This is a really silly really really bad idea as explained here, and here, and here.

The Sin City Siren has a handy voting reference post for Nevada voters.  Official information on voting and early voting can be found at the Secretary of State’s office website here.   Volunteering opportunities available here at Progress Now Nevada.

The Mourdockian Controversy spills into Nevada politics, as described in Slash/Politics here and here.   Is Heller the Mourdockian Candidate?

Note this statement from the Nevada Democratic Party:

“Senate candidate Richard Mourdock’s reprehensible remarks about rape are demeaning and insulting to all women.  Yet, Mitt Romney refuses to demand the extreme candidate pull down the TV ad featuring his endorsement and Senator Dean Heller has been silent on the offensive remarks.  This should come as no surprise given that Mitt Romney, Dean Heller and Richard Mourdock hold the same extreme views on women from taking away a women’s right to choose, defunding Planned Parenthood, opposing equal pay for equal work and restricting access to basic health services like birth control, mammograms and cervical cancer screenings.”

Senator By Appointment Only Dean Heller’s record on women’s issues is given an in depth treatment by his opponent, Representative Shelley Berkley (D-NV1) — actions do speak louder than words.

The Damned Pundit opines:

“Probably because his advisers told him it would be good for his own political future if he stands with the team now, and not just Romney-Ryan but the Nevada Republicans who are running for things. And one of those Republicans, Dean Heller, was on television the other night saying that he thinks President Romney should nominate Sandoval to the U.S. Supreme Court. Perhaps Sandoval thinks a little political support now wouldn’t hurt on that front.

Well, Heller’s a bit dim. Unless and until Sandoval renounces his pro-choice position, Obama is more likely to appoint Sandoval to the bench than Romney is.”

Well said.

Click on the maps for complete information on the presidential electoral college and the state senate races.

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Filed under 2012 election, Berkley, Heck, Heller, Nevada politics, presidential polls, presidential race

Mourdock and Heller: Closer Than You Think

Thus much for the “moderate persona.”

“News of disgraced Indiana Senate candidate Richard Mourdock’s view that pregnancy resulting from rape is a “gift from God” spread across the country yesterday, but what Nevadans should know is that their own Republican Senate candidate Dean Heller stands shoulder to shoulder with Richard Mourdock.  Heller even started joint fundraising accounts with Mourdock and has received $107,000 from their joint fundraising efforts. ” (DSCC)

FEC reports show the following:

“Heller & Mourdock Were Both Members Of Two Joint Fundraising Committees. The campaigns of Dean Heller and Richard Mourdock were both members of two joint fundraising committees, the Founders’ Committee and the 2012 Senators Classic Committee. Founders’ Committee Transferred More Than $60,000 To Mourdock’s Senate Campaign & More Than $70,000 To Heller’s Campaign.

According to FEC records, the Founders’ Committee transferred $60,903.47 to Hoosiers For Richard Mourdock and a total of $70,293 to Dean Heller’s Senate campaign.  2012 Senators Classic Committee Transferred Nearly $40,000 To Mourdock’s Senate Campaign & More Than $37,000 To Heller’s Campaign.  According to FEC records, the 2012 Senators Classic Committee transferred $38,561 to Hoosiers For Richard Mourdock and a total of $37,259.16 to Dean Heller’s Senate campaign. “

This would make sense given than Senator Heller voted for the Blunt Amendment, voted twice against the Lily Ledbetter Fair Pay Act, and voted twice against the Paycheck Fairness Act.

Again, Rep. Shelley Berkley (D-NV1) is a far better choice for Nevada women.  Voter information located here.

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Filed under 2012 election, Berkley, Heller, Nevada politics, Women's Issues, Womens' Rights

Berkley Better on Health Care

Senator Dean Heller (R-NV) says he wants a serious discussion about Medicare, thus seeking to justify his votes in favor of the Ryan Budget which turns Medicare into Coupon Care — because it’s the only plan out there. [LVSun] Not. Quite. There are the provisions of the Affordable Care Act, which extend the life of the popular health insurance program for seniors, and there are suggestions that Medicare be able to negotiate with pharmaceutical corporations for lower prescription drug prices.

Senate candidate Shelley Berkley (D-NV1) responded.

“Berkley criticized the Ryan plan for use of government vouchers that would be used to purchase private insurance, saying bringing in for-profit companies would hurt consumers.

She advocated for better checks in the Medicare system for eliminating fraud and waste, allowing Medicare to negotiate directly with drug companies, and the re-importation of medicines to cut costs of the program.”  [LVSun]

And, then there’s Medicaid.   The Nevada budget draft calls for increases in education funding by $18 million and an increase in the Medicaid population estimated to require about $104 million. [NNB]  Nevada can reasonably expect about 136,563 total new enrollees [Kaiser pdf] Those would be primarily low income individuals who are single parents with dependent children, and/or who are aged, blind, or disabled. [Kaiser pdf]  This is precisely the group under assault in the Romney/Ryan budget which would transform the Medicaid funding into block grants.

Then what? Assuming the FY 2013 budget suggested by the Romney/Ryan Campaign, we can expect:

“Ryan’s budget turns Medicaid into a block grant that cuts the program by $810 billion over the next decade.  That is a 22% reduction to the Medicaid program from the block grant.
Ryan’s budget repeals the Affordable Care Act’s (ACA) Medicaid expansion, cutting an additional $643 billion from Medicaid over the next decade.
In total, Ryan’s budget cuts Medicaid by $1.5 trillion over the next decade, cutting the program by one-third.
By 2050, Ryan’s budget cuts the Medicaid program by nearly three-quarters, according to the Congressional Budget Office (CBO).”  [DEC] (emphasis added)

So, while the number of individuals who need Medicaid may increase given current population trends, the Romney/Ryan plan would all but eliminate the program by 2050.   Consider the impact of this on those who have elderly parents or relatives in nursing care facilities?

Representative Berkley’s position:

“Shelley Berkley has fought to protect the Medicare program that hundreds of thousands of Nevadans rely on. Shelley Berkley has never voted to cut Medicare. The healthcare law ends taxpayer subsidies to private insurance companies and cuts out waste, fraud and abuse to save the Medicare program $716 billion. This attack is particularly hypocritical given that Heller himself voted to retain these so-called “cuts” when he voted for the Ryan budget. Heller said he was “proud” to be the only politician in Washington to vote twice to end Medicare as we know it by turning the program over to insurance companies, cut benefits and increase out-of-pocket costs by $6,000.”

The Affordable Care Act, which Heller opposes, garnered Berkley’s support for its improvements in basic policy coverage; its prescriptions against insurance corporation abuses of recessions, limited lifetime benefits (junk policies), and its extension of more eligible individuals in the Medicaid program.

So, if a person’s family includes an eligible low income elderly or disabled person in need of health care services — the intelligent choice is Rep. Shelley Berkley.

** For details on the Romney/Ryan tax and spending plan click here.

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Filed under 2012 election, Berkley, Heller, Medicaid, Medicare

Who’s Pro-Life in the Nevada Senate Race?

I have an old fashioned idea that to be “pro-life” means just that.  A person proudly making that announcement about themselves should be supportive of those proposals which seek to better the chances for children to be born healthy, stay that way, and be as well cared for and educated as the family can manage.

Shelley Berkley (D-NV1) the Democratic candidate for the Nevada Senate seat in this election fits my definition of Pro-Life.  Her voting record is consistent with respect to supporting children’s health programs, and with regard to legislation which makes it easier for families to provide for their children, as in support for equal pay for women wage earners, and support for women’s health.

By contrast, I have some difficulty classifying Senator Dean Heller as “pro-life.” While he’s definitely “pro-birth,” the remainder of his record doesn’t indicate a person all that concerned with what happens after the Blessed Event arrives on this planet.

Senator Heller’s not met too many corporate subsidies or defense contractor related appropriations he doesn’t love, but when asked to vote to fund support programs related to the health and well being of children he’s all too ready to pronounce that we can’t spend the money because there’s This Big Fat Deficit.   We’d be asking the kids and grandkids to pay for the federal debt — in their own interest, as it were, because they’re the ones who get the benefit of these programs.

Children need to be born healthy.   Programs such as Planned Parenthood offer wellness programs for women and pre- and post- natal care. What could be more pro-life than that?  That Senator Heller obsesses about the 3% of Planned Parenthood funding which supports abortion procedures is highly unfortunate because most of what the clinics provide is care for wives and mothers.   Representative Berkley has been supportive of medical care for women, and by extension their children.

Children need to be fed.  When the House of Representatives voted to shred the social safety net on March 23, 2012 and shave $134 billion from SNAP funding Representative Berkley voted NO.  Her Republican colleagues Amodei and Heck voted “yes.”  The youngster coming into the world didn’t get to select his or her parents, nor get any choice as to their income bracket.  If we truly value children (beyond the embryonic stage) then we should do all we can to feed them adequately.  If the parents are struggling, then a civil society requires we chip in and help put some basic food items in the bottles or on the table.

Children need to stay healthy.  One of the nicer features about children is that they are remarkably durable.  Most need some basic vaccinations, and beyond that there’s the typical trajectory of abrasions, sprains, and a few fractures.   In an advanced country such as our own there is no excuse for having any child un-vaccinated for common diseases.  The Affordable Care Act, which Representative Berkley supported, requires health insurance plans marketed as “basic” to cover immunizations.  Senator Heller continues to disparage Obamacare in general terms while not speaking to the requirements in the law which specify basic coverage for children and their medical needs.  Indeed, Senator Heller was consistent and vociferous in his opposition to the Children’s Health Insurance Program which sought to ease the burden of serious childhood injuries and illnesses for middling income families.  Being pro-life means never telling a family they have to chose between the best health care for their seriously  ill or injured child and bankruptcy.

Children need to be nurtured.  The current flap over Big Bird illustrates a larger question.  Should we support educational programs for pre-school children which seek to improve their levels of school-readiness and school skill sets — without regard to the family’s income?  Again, in a civilized society the answer would be yes.  If the family cannot afford cable programming for children then there should be educational programming available to every household via the old antenna.   A pro-life stance would be one wherein ALL children, regardless of socioeconomic status, can benefit from pre-school and primary educational programs.  Representative Berkley supports PBS programming, Senator Heller doesn’t.

Children need access to as many forms of educational experiences as we can provide.  They need wildlife parks, they need museums, they need libraries, they need playgrounds, and votes to curtail funds for these institutions suggests that we believe that only those children who are fortunate enough to get born into a family of means can experience these institutions.  Rich families might take the kids on safari — the rest of the families need the wildlife park.  Wealthy families might amass private libraries — the rest of the families need the local library.  Wealthy families can visit historical sites — the rest of the families and their children need the museums.   And so it goes.

Children need parents who can support them.  This means supporting legislation which helps parents provide the most income they can manage. When wives are earning only 75% of what their husbands can earn in comparable employment then it is the whole family that suffers financially.  Each time a person votes against equal pay for equal work, or votes against employment discrimination legislation, that’s a vote which makes it just that much more difficult for families to meet their children’s needs.  Senator Heller has not been all that supportive of these families, Representative Berkley has.

Being pro-life means, or should mean, more than merely being pro-birth.  It means more than just caring for a fetus for 9 months — it’s really a matter of caring for — and about — the child for the next 18 years.   In this instance, Senator Heller’s record indicates a pro-birth stance, Representative Berkley is the pro-life candidate in the race.

 

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Filed under 2012 election, abortion, Berkley, education, Heller, Nevada politics

Berkley Better on Financial Regulation Reform

There’s one very direct way to get to my heart — support common sense regulations to curb the excesses of Wall Street which threaten the interests of Main Street.  Representative Shelley Berkley’s (D-NV1) done this.  Senator Dean Heller has not.

Case in Point:  Here’s a segment of Senator Heller’s response to Rep. Berkley’s charge that he has placed the interests of Wall Street over those of Main Street.

“Fact: Dean Heller voted against Dodd-Frank bill, legislation masked as “Wall Street reform.” This bill would institutionalize bailouts, harm job growth, and create new taxes by intrusive and unaccountable government agencies and offices. (Paul Sperry, “Dodd-Frank Rules Will Crush Employment,” Investor’s Business Daily, December 13, 2011)”    [Heller]

In order to accept Heller’s “fact” we have to accept that the Dodd Frank Act (1) institutionalizes bailouts, (2) harms job growth, and (3) creates unaccountable government agencies.”  Three falsehoods do not create a FACT.

Does the Dodd Frank Act institutionalize bailouts?  NO.  The Dodd Frank Act expressly forbids financial regulators from bailing out a failed institution.  As I’ve repeatedly pointed out on this site, Dodd Frank requires that a failing institution either (a) be placed into bankruptcy or (b) go into resolution.   So, what could Senator Heller be talking about?

There is a provision in the Dodd Frank Act which allows the Federal Reserve and the FDIC to provide “system wide support” in the event of a major systemic crisis.  Critics of the Dodd Frank Act have erroneously cited these elements to argue that the statute perpetuates bail outs.  Wrong. What perpetuates bail outs is the pre-Dodd Frank environment in which there was no authority to wind down failing financial institutions and prevent them from “infecting” other stable ones.

Even a modicum of common sense says that you don’t allow one bad apple to sour the entire barrel.  In the case of a financial bad apple (or actor) you put it in “resolution,” a term bankers like ever so much more than “bankruptcy,” and prevent it from taking the healthy parts of the  system down with it.

Does Dodd Frank harm job growth? NO. The article cited by Senator Heller comes from the  Investor’s Business Daily, which in turn quotes the outgoing chairman of the American Bankers Association.

But the banking industry says burdensome red tape is hurting economic growth and jobs in a still-sluggish labor market.

“The level of real GDP could be 2.7% less by the year 2015 than would otherwise be the case for the United States,” said Stephen Wilson, outgoing chairman of the American Bankers Association. “This could result in 2.9 million fewer jobs being created.” (emphasis added)

First, let’s deal with the “burdensome red tape” argument.  One of the more intriguing parts of the ABA’s assault on the reforms has been to send their lobbyists by the brigade load to help write agency rules to meet their needs, and then to complain vociferously that the rules are “too complicated.” The former head of the FDIC explains:

“As to complaints from the banks that overlapping regulations are adding complexity without benefit, Bair suggests that perhaps reforms like the Volcker rule would be less complex had bank lobbyists not pushed for so many exceptions and clarifications to accommodate for industry concerns.” [Forbes]

Secondly, what Senator Heller is taking as a “will,” as in the implementation of the Dodd Frank Act will cause job losses is actually a “could” in the original article he cites.  Furthermore, the ABA spokesperson is projecting out to 2015.  I could just as easily argue that problems in the EuroZone will depress the global economy by 2015, but that doesn’t mean we should stop doing business with France or Germany because issues their monetary system could affect us.

Third, it’s more than a little ironic to have Senator Heller seeking to substantiate his Independence From the MegaBanks and Wall Street by citing the arguments made by MegaBanks and Wall Street (ABA) in opposition to the Dodd Frank Act, in a publication the editorial policy of which represents Wall Street interests.

Finally, compare the “could cost” jobs contention with the reality that self regulation and de-regulation in which the Housing Bubble Blossomed, the Mortgages Melted Down, and the Financial Sector Seized Up, cost the real American economy all manner of REAL jobs.

Are there “unaccountable” government agencies and offices? NO.
There are two provisions of the statute which precipitated this charge.  The first, and most obvious, target was the Consumer Financial Protection Bureau.  “The bureau’s goals include scrutinizing major violations of mortgage disclosure laws and other infractions at firms that could cause consumers to unwittingly sign up for risky loans. It also examines whether credit card forms issued by big banks are misleading.” [NYT] Right off the bat we can tell these activities weren’t going to be popular with the MegaBanks and the Wall Street investment firms.

Arguments from the Bankers give the impression that the CFPB is some rogue organization out to haunt the bankers with little or no oversight. In reality the CFPB is a division of the Department of the Treasury.   Additionally, Section 1017(e)(4) of the Dodd-Frank Act gives the Bureau a statutory responsibility to present an annual report to the Congress. Thus, the leadership of the agency are subject to confirmation by the Senate, the bureau is under the administrative jurisdiction of the Treasury Department, and it is required to prepare annual reports for the Congress.  Hardly the structure of an “unaccountable agency.”

The hard truth is that the bankers, mortgage originators, mortgage securitizers, and the credit card companies didn’t want ANY agency, and if one had to be created they wanted it to be ensconced in the Office of the Comptroller of the Currency, an agency which sees its mission as protecting banks  and not consumer advocacy. [ISLR] This would also be the same agency which over-ruled state consumer protection statutes beginning in 1998.* [ConsumersUnion]

Again, there’s no small amount of irony in Senator Heller’s claim to be independent of banking sector influence while touting the talking points from the bank lobbyists who tried their hardest to either kill the agency protecting consumers, or if its death weren’t an option, then to put it under the administrative jurisdiction of an agency well known for being more concerned with banks than with their customers.

The Financial Stability Oversight Council is a second target of the banker’s objections.  It, too, is under the administrative jurisdiction of the Department of the Treasury.  The function of this council, created by Title I of the Dodd Frank Act, is to “(1)  identify the risks to the financial stability of the United States from both financial and non-financial organizations, (2) promote market discipline, by eliminating expectations that the Government will shield them from losses in the event of failure, and (3) respond to emerging threats to the stability of the US financial system.”

In short, banks and investment operations will be scrutinized to see if they are creating a financial situation which threatens the stability of our economic system, and will be told in no uncertain terms that if they are a threat then NO BAILOUTS will be forthcoming.  Although, bankruptcy and resolution might be.

What the FSOC does is to get all the regulators in the same room.  The Secretary of the Treasury is the chair, and voting members include the Federal Reserve chairman, the Comptroller of the Currency, the director of the CFPB, the chair of the SEC, the chair of the FDIC, the chair of the CFTC, the director of the FHFA, the chair of the National Credit Union Administration Board, and one independent member appointed by the President and confirmed by the Senate.  [FSOC]

Ultra-conservative organizations allied with the bankers and Wall Street investment firms have thus far criticized the FSOC as an unconstitutional power grab and alternately as an organization incapable of getting anything done. [WaPo] [CEI]  Let’s return to the commentary pointing out that it is very difficult to get things moving, much less finalized, when industry lobbyists are pushing for exceptions and clarifications “to accommodate industry concerns.”

If Senator Heller is categorizing the FSOC as one of the “unaccountable government agencies and offices,” then he is objecting to a structure in which federal regulators have the opportunity to get on the same page.  The banking and financial sector fought the Dodd Frank Act oversight provisions saying that “de-regulation” and “self regulation” would suffice to prevent the next big market Bust.

If we aren’t convinced the bankers and financialists are still trying to make the argument for de-regulation and self regulation, then a snippet from last evening’s presidential debate from Governor Romney should make the point clearly:

“It’s been two years. We don’t know what a qualified mortgage is yet. So banks are reluctant to make loans, mortgages. Try and get a mortgage these days. It’s hurt the housing market because Dodd-Frank didn’t anticipate putting in place the kinds of regulations you have to have. It’s not that Dodd-Frank always was wrong with too much regulation. Sometimes they didn’t come out with a clear regulation.” [ABA]

And, a clear regulation would be what?  One that conforms to the interests of the mortgage originators? The bankers? The securitizers?  Of course the proponents of the Dodd Frank Act knew that regulations would have to be written to implement the bill — every bill requires that process!  What they also knew was that there would be industry/sector push back against any attempt to rein in the Wall Street Casino.

Apparently lost to Governor Romney is the fact that more stringent mortgage requirement are now in place, and the glut of no-doc subprime Heaven only knows what the rates will be mortgages which fed the securitization machine feeding in turn the Housing Bubble, is Kaput.  Unless, he’d like to go back to the Good Old Days of Synthetic CDOs based on those no-doc hybrid adjustable rate mortgages which proved so deleterious to the American economy?  We’ve tried self regulation and de-regulation and look what it got us in 2007-2008.

If Senator Heller is nostalgic for the days of self regulation and de-regulation then he’d by all means seek to dismantle the two government offices newly responsible for the oversight and supervision of our financial services.  However, to do so invites precisely the kind of behavior on the part of the financialists which got us in deep trouble — from which we are still trying to dig our way out.  His response to Rep. Berkley merely serves to illustrate his adoption of the MegaBank and Wall Street party line, and his ties to the financial sector rather than his independence from it. Or, as an elderly relative once put it: If you Quack like a duck, don’t get upset when someone calls you  a Mallard.

Representative Berkley’s support for the Dodd Frank Act, with its reforms of the oversight and supervision of our financial institutions, demonstrates a far better understanding of the necessity to restrain the excesses of a financial environment in which short term profits are given greater weight than long term economic stability.

References and Additional Reading:  “Dodd-Frank Rules Will Crush Employment, Banks Warn,” Investor’s Business Daily, Paul Sperry, December 12, 2011.  Representative Spencer Bachus, HFSC. citing IBD article.  “Real Talk With Sheila Bair,” Forbes, July 25, 2012. Jeremy Hobson, “Former Regulator…,” MarketPlace.Org, September 25, 2012.  CFPB report archives, as of October, 4, 2012. * “OCC’S AGGRESSIVE PREEMPTION OF  STATES’ CONSUMER BANKING PROTECTIONS, Consumers Union, July 17, 1998.   USPIRG, “Consumer, Civil Rights Groups Attack New Proposed Rule Preempting State Consumer Protection Laws,” May 26, 2011.   Bloomberg News, “U.S. Treasury Criticizes Currency Comptroller on State Rules,” June 28, 2011.   Jeanine H. Arnett, Director, Government Relations & Public Policy, AFP, “Geithner Gives New Life to Money-Market Fund Proposals,” September 28, 2012.  Congressional Research Service, “Financial Stability Oversight Council: A
Framework to Mitigate Systemic Risk,” (pdf) November 15, 2011. ABA Reform Tracker, Dodd Frank, October 4, 2012.

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Filed under 2012 election, Berkley, Economy, financial regulation, Heller, Nevada politics

Berkley Better on Banking

Granted, it’s no surprise a progressive blog would endorse the candidacy of Rep. Shelley Berkley (D-NV1) for the Nevada Senate seat — but this isn’t a patellar reflex test.   Anyone who has been reading this blog for over a week knows that this is the place wherein a person should expect a heavy dose of “Please Can We Save Capitalism From The Wall Street Wizards Who Feel Entitled To Have Taxpayers Cover Their Losses While They Reap All The Profits.”  Or, can we please just save Capitalism?

Representative Berkley summed the regulatory situation up nicely,”As we rebuild our economy, we must put in place common-sense rules to ensure Big Banks and Wall Street can’t play Russian Roulette again with our futures. Wall Street may be bouncing back, but we know from experience they’re not going to police themselves.”

She’s located the problem creators precisely.  Big Banks and Wall Street investment firms played fast and loose with the U.S. housing market.  The aftermath is still visible on the Nevada landscape.  Foreclosures are still  moving forward in the Silver State.   And, yes, we do know that the Big Banks and the Wall Street investment firms have little inclination to rein in their trading activities if such action might cut into their revenues — and bonuses.

Personally, I didn’t get all I wanted from the Dodd Frank Act.   I’d have been a far happier camper if synthetic credit default obligations were flat illegal.  I’d have been happier if the betting with credit default swaps was more severely curtailed.  I’d have been gleeful if the act had made securitization more rational.  However, we did get (1) clearinghouse oversight of some derivatives, (2) a consumer protection bureau to supervise the more egregious practices of some mortgage marketers, (3) a rational system to determine systemic risk to our banking sector, and  (4) an orderly liquidation authority provision to replace the bankruptcy/bailout mentality on Wall Street and in Washington, D.C.

Representative Berkley supported the Dodd-Frank Act, on December 11, 2009 she voted in favor of the bill.  Representative Dean Heller (R-NV2) voted against it. [GovTrack]   There is more than a little irony in the protestations coming from Senator Heller about being “against bank bailouts,” when his vote was one to preserve the bailout/bankruptcy option status quo on Wall Street.  Far from being an affirmation of ‘bail outs,’ the Dodd Frank Act provides a resolution process to wind down banks which have the potential to cause chaos similar to the Lehman Bros. collapse.

To pound on this point a step further, the opposition to the orderly liquidation authority came from Wall Street and the Big Banks, and early in the game from Big Bank allies at Treasury and the FED.   The crucial question concerned who would get burned in the event of a meltdown.  Under the old system a Big Bank facing insolvency or illiquidity faced two options — (1) either collapse into bankruptcy; allowing the counter-parties to dodgy portfolios to grab their collateral and run, while battalions of bankruptcy attorneys fought endlessly over the remains; or (2) get “certified” as a Systemic Risk and have the Treasury Department organize a bail out.   The Big Banks calculated that the Treasury and Federal Reserve wouldn’t want a repetition of the Lehman Debacle and would ride to the rescue.

The arguments from the Big Banks were predictable — the new statutory requirements for the liquidation process weren’t  sufficiently transparent; this coming from Big Banks which had squealed the loudest about opening their books for inspection.  The new liquidation authority would cause increased bank consolidation — which was happening already because larger, better managed, banks were buying up the flotsam and jetsam in the wake of Washington Mutual, Wachovia etc.  And, finally new regulations were unnecessary because such commercial banks as Wells Fargo and Bank of America weren’t dependent on proprietary trading for their major income.  The latter is an interesting proposition because it’s perfectly possible to have a commercial bank with solid conservative management owned by a bank holding company which is a complete mess.

So, instead of a resolution authority which allows regulators to keep the bank stabilized while finding buyers for the good stuff, fencing off the bad junk, and preventing the counter-parties from running away with their stash before any other creditors can even get in line — the Big Banks wanted “better bankruptcy laws…” and the Good Old Days …with bailouts.  Then Representative  Heller was happy to oblige.   Not only did he oblige once, he obliged twice — voting against the conference report on the Dodd Frank Act H.R. 4173 on June 30, 2010. [GovTrack] Representative Berkley voted in favor of the conference report on H.R. 4173 (111th).

Want a Senator not quite so obliging and beholding to the interest of the Wall Street Wizards and the Big Banks?  The choice would be Berkley.

References and Additional Recommended Reading Hardee, North Carolina School of Law, “Orderly Liquidation Authority, 4/4/2011. (pdf) Guynn, St. Louis Federal Reserve, “The FDIC’s New Resolution Authority under the Dodd-Frank Act: Will it Work and Can It Prevent “Too Big to Fail”? Sept. 2010. (pdf) Erickson & Fucile, “Dodd Frank Reforms After 2 Years,” Center for American Progress, July 20, 2012.  Hal S. Scott, “The Reduction of Systemic Risk, Capital Markets Regulation, Nomura School of Business, Harvard University, (pdf).  American Academy of Actuaries, “Federal Insurance Regulations and Systemic Risk, links to articles.   Frank, “Wall Street Reform and Consumer Protection,” U.S. House, Summary.   H.R. 4173 (111th Congress) Bill Summary and History, GovTrackCongressional Research Service, “Financial Regulatory Reform and the 111th Congress,” June 1, 2010.  SIFMA, (Dugan, Ryan) “Bloomberg View Op-ed: Ryan and Dugan – Too Big to Fail? Then Get a Living Will,” June 27, 2012.

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Filed under 2012 election, banking, Berkley, Economy, financial regulation