Tag Archives: deregulation

Rep. Amodei’s Wonderful Record: January De-Regulation Edition

Representative Mark Amodei’s (R-NV2) record in the 115th Congress is as dubious as the institution itself.  For a group touting their “accomplishments” the actual record doesn’t quite hit that level.  Post Office namings, and other minutiae are not included in this list.

Roll Call 8, January 4, 2017:  Midnight Rules Relief Act — “This bill amends the Congressional Review Act to allow Congress to consider a joint resolution to disapprove multiple regulations that federal agencies have submitted for congressional review within the last 60 legislative days of a session of Congress during the final year of a President’s term. Congress may disapprove a group of such regulations together (i.e., “en bloc”) instead of the current procedure of considering only one regulation at a time.” Representative Amodei voted in favor of this bill (238-184).   But, wait, there’s more:

“According to the CRA, resolutions of disapproval not only nullify the regulation in question; they also prohibit a federal agency from issuing any other regulation that is “substantially the same” in the future, unless specifically authorized to do so by a future act of Congress. As a result, these mass-disapproval resolutions would permanently block agencies from addressing threats to public health and safety.”  (emphasis added)

Those who believe that things like corporate accountability, safe working conditions, clean air, and clean drinking water are important wouldn’t find this very appealing.  However, that didn’t stop Rep. Mark Amodei from supporting this bill, which was essentially a solution in search of a problem.

Roll Call 23, January 5, 2017:  “Regulations from the Executive in Need of Scrutiny Act of 2017”  Representative Amodei voted in favor of this bill.  “(Sec. 3) The bill revises provisions relating to congressional review of agency rulemaking to require federal agencies promulgating rules to: (1) identify and repeal or amend existing rules to completely offset any annual costs of new rules to the U.S. economy.” [Cong]  This is vague to the point of ridiculousness.  There are several ways to do a cost analysis, and we can bet that the GOP has in mind only the most stringent, even if there is an obvious benefit to public health, safety, or general well being.  Frankly, there are some rules we have put in place which are expensive in terms of commercial and industrial calculations, but necessary in terms of public health and safety — we do not allow, for example, the unlimited release of arsenic into supplies of drinking water.   It’s hard to imagine this as a “major piece of legislation” without considering the potential hazards it creates for local governments and citizens who have to live with the pollution, work rules, and other regulations which place them at risk.

Roll Call 45, January 11, 2017: “(Sec. 103) This bill revises federal rulemaking procedures under the Administrative Procedure Act (APA) to require a federal agency to make all preliminary and final factual determinations based on evidence and to consider: (1) the legal authority under which a rule may be proposed; (2) the specific nature and significance of the problem the agency may address with a rule; (3) whether existing rules have created or contributed to the problem the agency may address with a rule and whether such rules may be amended or rescinded; (4) any reasonable alternatives for a new rule; and (5) the potential costs and benefits associated with potential alternative rules, including impacts on low-income populations.”  Here we go again!  Yet another way to tie the hands of executive branch departments and agencies, and a GOP tenet for some time now.  Remember, the rules don’t have to be in one category (for example, environmental regulation) they can also cover such things as SEC rules and regulations, banking, and other financial regulations.   Representative Amodei, voted in favor of this bill and perhaps needs to explain if he meant this to handcuff the financial regulators who are responsible for seeing that Wall Street doesn’t replicate its performance in the run up to the Housing Crash of 2007-2008.

Roll Call 51, January 12, 2017:  SEC Regulatory Accountability Act, and yet another House attempt to slap a “cost-benefit” analysis on SEC regulations on financial market transactions.  Representative Amodei voted in favor of this bill.    There were objections to this bill at the time, and this is one of the more cogent:

“The most prominent new requirement would mandate that the SEC identify every “available alternative” to a proposed regulation or agency action and quantitatively measure the costs and benefits of each such alternative prior to taking action.  Since there are always numerous possible alternatives to any course of action, this requirement alone could force the agency to complete dozens of additional analyses before passing a rule or guidance. Placing this mandate in statute will also provide near-infinite opportunities for Wall Street lawsuits aimed at halting or reversing SEC actions, and would be a gift to litigators who work on such anti-government lawsuits. No matter how much effort the SEC devotes to justifying its actions, the question of whether the agency has identified all possible alternatives to a chosen action, and has properly measured the costs and benefits of each such alternative, will always remain open to debate.”

Speaking of a “Lawyers Full Employment Bill,” this is it.  Imagine voting in favor of allowing an infinite and interminable number of lawsuits demanding that the SEC consider ALL available options before promulgating a rule.  That didn’t stop Representative Amodei from voting in favor of it.

If you’re seeing a pattern, you’re right.  “De-regulation” has been a Republican talking point for the last 40 years.  However, while the term sounds positive when it’s generalized the devil, as they say, is in the details.  The January flood of deregulation bills in the 115th Congress wasn’t designed to tamp regulations on ordinary citizens, but on the corporations (especially in terms of environmental issues) and Wall Street players who want more “flexibility” in their transactions.

What the Republicans have yet to provide are instances of jobs lost because of environmental regulations.  Since this evidence is scarce, the next ploy is to argue that the costs outweigh the benefits.  By emphasizing the short term monetary costs the GOP minimizes the importance of long term economic or environmental costs, and the impact deregulation has on residents in our states and communities.

We can point to jobs lost after financial deregulation — Nevada was one of the poster children for financial sector deregulation impact.  Eight months later, Representative Amodei has yet to offer more than the usual highly generalized platitudes about the significance of the deregulation fervor during the first month of the 115th Congress.

We’ll be taking a look at some other “important” votes taken by our 115th Congress.  In the mean time, it’s depressing but productive to watch what this current Mis-administration is doing in regard to North Korea, Iran, women’s issues, common sense gun control legislation, and the various and sundry scams and grifts associated with the Cabinet.

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Filed under Amodei, Economy, financial regulation, 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

Anti-Choice: The Rebirth of Deregulation

I don’t think anyone in the state of Nevada doesn’t know what happened the last time Wall Street was left unfettered.  The Bubble splattered all over the state.   The offcast included 167,000 empty houses. [USAToday]  Nevada’s unemployment rate soared to 12.8% by December, 2009.  By October 2010 the state’s unemployment rate was 14.4%.  And now the House of Representatives is on track to vote on H.R. 10, the “Choice Act” to dismantle the financial regulatory reforms enacted in the wake of the Housing Debacle and deregulated banking disaster.

Two procedural votes are on record to move this bill forward — House vote 290, and House vote 291 — and Representative Mark Amodei voted in favor of bringing this bill to a vote by the full House.   Watch this space for an update on the vote for passage.

Update:  On House vote #299, Representative Mark Amodei (R-NV2) voted along with 232 other Republicans to essentially gut the financial reform regulations enacted in the wake of the Housing Bubble debacle. (HR 10)

Representatives Kihuen, Rosen, and Titus voted against this deregulation bill.

Comment: Be aware of Republican representatives to frame this vote as one against Bank Bailouts and “Too Big to Fail.”   In a polite world we’d call this something euphemistic like “south bound product of a north bound bull.”  The Dodd Frank Act requires banks to have a plan for unwinding failing banks, and bankers have screamed to the heavens about provisions to allow outside oversight of banking management.  More simply, if you approve of the antics of Wells Fargo — then you’ll love the “Choice Act,” a bill which gives banks the “choice” to skewer its customers and investors.

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

The Not-So-Stealthy Attack on Americans

During this something less than merry Month of May the United States Senate is scheduled to take up the Regulatory Accountability Act which will make it all but impossible for our own government to protect citizens (and citizen consumers) from corporate depredation.  We have a warning:

“Among its most egregious provisions, the RAA sets an impossibly high burden of proof that agencies would have to meet before finalizing and implementing a new rule, such as a new air quality or food safety standard. The bill also requires agencies to conduct several rounds of cost-benefit analyses that give more weight to the compliance costs to industry than the benefits to Americans. Taken together, these provisions and others in the bill could lead to total gridlock in the agencies charged with protecting the food we eat, the water we drink, and the air we breathe; ensuring that products are safe before they enter the market; and reining in the worst financial market abuses.”

Interestingly enough the Big Corporate Interests don’t even bother to mention “small businesses” in their push — read shove — for this anti-consumer, anti-worker, anti-Main Street bit of legislation.

A better label would be the Unaccountability Act of 2017 — in that corporations would be protected from citizens who like drinking clean water and breathing clean air, eating healthy and uncontaminated food, driving safe cars, and being reasonably assured that Wall Street investment interests aren’t pulling a “de-regulation” extravaganza that could make the debacle of 2007-2008 seem mild by comparison.

If you enjoyed the scandals of Enron, the predatory behavior of Wells Fargo, the Great Recession brought on by Wall Street Casino operations — then you’ll love this draft to deregulate the major corporations.

On the other hand if one is appalled by the “Screw Grandma Milly” antics of the Enron crowd, if one isn’t concerned that the bank isn’t surreptitiously opening accounts (and charging fees) like Wells Fargo, or if one isn’t concerned that mortgages might be oversold, and fed into another giant bubble of derivative trading — then a phone call to the Solons of the Senate is required.

As the machinations of the Russians, the squirming of the administration, and the daily deluge of tweets from Dear Leader, suck the air out of the room, beware that major corporate interests are working through the halls of Congress.

This is the time to contact our Senators, Senator Dean Heller (who has made no secret of his affinity for deregulation) and Senator Catherine Cortez-Masto who is more likely to be amenable to the concerns of ordinary citizens.  The so-called “Regulatory Accountability” is nothing more than a not-so-stealthy attack on ordinary Americans by extraordinarily powerful corporate interests.

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Filed under conservatism, consumers, Economy, Enron, financial regulation, Heller, Nevada politics, Politics, public safety, secondary mortgage market, subprime mortgages

Bankers Bank On Economic Amnesia

Occupy Wall Street bankers Zillow reports that the current median home value in Nevada is $189,700, up some 16.4% over the past year, and another increase of 6.2% is predicted. The median listed price of a home in Nevada is now $215,000, and the median selling price is now $198,475.  [Zillow] This is good news for Nevadans in Clark County because the median list price as of July 2011 was $118,500. [Movoto]  Bankrate posts mortgage interest rates ranging from 4.1% to $.4% in the Reno area, and a range of 4.05% to 4.4% in the Las Vegas metropolitan region.  [Bankrate]  There’s another factor to consider, especially in southern Nevada, home resale inventories have stabilized, and there’s been no major increases in distress sales (foreclosures and short sales) as a percentage of the total housing market in September. [Movoto]

Mortgage interest rate trends are also interesting because there’s been a decline since January 2005.  The interest rate for a 30 year fixed rate mortgage was about 5.71% in January 2005, 6.15% in January 2006, and 6.22% in January 2007 as the Housing Bubble was about to burst all over everyone.  As the Bubble started to splatter in January 2008 the interest rate was 5.76%, dropping to 5.05% in January 2009. Fast forward to January 2012 and the interest rate had dropped to 3.92%, going down to 3.41% in 2013, and then increasing again in January 2014 back up to 4.43%. [FredMac]

Why are these numbers of any interest?

(1) When homebuyers can get credit they are able to pay prices closer to the original asking price. (2) It’s no longer a buyers’ market when sellers are getting better prices. (3) Someone must be doing a bit better because there seems to be more competition for mortgage money, given that in a free market commodities (in this instance mortgage money) are slightly more costly the higher the demand.  (4) These numbers also highlight the Big Lie that the Wall Street casino operators are trying to sell across the country.

David Dayen, writing for Salon caught the Big Fib and described it as follows:

This is part of a larger myth, blaming government’s efforts to clean up the mortgage market for the slow housing recovery and sluggish economy. This idea that banks are so petrified about burdensome regulations that they’ve decided to scale back their business model of lending to people seems far-fetched.

That’s because it is far fetched.  We can see the whole picture simply by sitting here in one of the states most hard hit by the collapse of Wall Street’s Housing Bubble, and looking at our own numbers.

First, if bankers were so insecure about lending then why have interest rates rebounded since the Bubble burst?  When no one is buying homes rates go down because there simply aren’t enough customers clamoring for loans.  However, in this ‘sand state’ the interest rates have gone up by about 1%.

Secondly, it’s obvious someone is buying something because  the Las Vegas housing market, almost obliterated when the Bubble Burst, has seen an increase in the median price of homes, up by an impressive 16.4%.

It’s a bit difficult to make the case that bankers aren’t lending (because of the icky government financial regulation reform) when median list prices and median selling prices have both increased.  If banks weren’t lending then we’d expect housing prices to flatten out because there weren’t enough bidders for the homes.  Again, Dayen sums up the bankers’ game: “The real motivation here is to roll back regulations and return to the go-go era where anyone who can fog a mirror can get a loan. We know how that turned out the last time.”

Just in case anyone catches the overt fibbing, spinning, and general mendacity of the bankers’ latest pronouncements, they’ve left themselves a bit of wiggle room.  The economic revival is “sluggish.” Translation: If you’d just let us get back to deregulated free for all casino operations we’d be richer. And, “the housing recovery has been slow.”  Translation: Want to get more, and more, and more, mortgages from ‘anyone who can fog a mirror’ to slice, dice, and tranche, into mortgage based securities – upon which we will get richer.

There’s a better reason to explain a sluggish economy and a slowly reviving housing market.  Ordinary people have to have incomes which support major purchases – like homes – and what has happened to the median income in Nevada since the Bubble Burst in 2007-2008 isn’t pretty.

The median HI for Nevadans in 2013 was $51,230, down 9.1% since the Housing Bubble burst in 2008.  The Mean HHI for the top 5% of Nevada income earners was $294,939, which dropped by 2% after the washout of 2007-2008. [Pew]

Given the precipitous drop in median earnings, the question might not be about how “sluggish” the recovery has been, but how we’d experienced any recovery at all.  We might dare to ask the same question about home sales.  Again, given the decrease in median household income it’s a wonder home sales have rebounded – especially if we consider that home values are now up 16.4% with more increases projected.

Once more, Wall Street has demonstrated very clearly it’s profound dependence on debt and volatility, while Main Street remains dependent on consumer spending and stability.   In this instance, as in so many others, it’s important not to conflate what’s good for Wall Street with what’s good for business in general.

It’s great for Wall Street to have bundles and bundles of unregulated mortgages, car loans, and lines of consumer credit to shovel into its deregulated  casino operations and Bubble Factories – it’s not so great for Main Street to have abandoned homes, foreclosures on every street, and too many unemployed construction workers in the community.

Caveat Emptor – the latest Big Lie would have us believe the investment bankers want the very best for all of us – after their last debacle the only way they’ll sell this notion is if the American public gets a bad case of economic amnesia.

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

Legacies and Burdens

House CleaningIt’s a good practice to periodically clear out unwanted and unused items from cupboards, pantries, basements, and attics.  Some items are superficial, some represent fads and fashions, others are weighty pieces of dubious use and questionable value — and there are others which are downright unsafe.  The U.S. has some items left by previous and present tenants which fall into the latter category.

Trickle Down Economics:  It’s high time this flammable collection hit the bin.  We’ve probably all purchased items of untrustworthy provenance at one time or another — like raffle tickets for unknown charities, or magazine subscriptions from a con team, or perhaps unwarranted service on a motor vehicle.  However, this was a fraud perpetrated on Americans which has had spawned undue hardship and such illegitimate progeny as ‘austerity economics.’   First off, there never really was a reputable basis for the Trickle Down theory. [AmericanThinker] Even conservative economists are willing to disparage the concept of a school or theory of Trickle Down.  It was, and remains, all Trick and nothing down.

The trick came in the infamous 1971 Powell Memo.  Lewis Powell saw the “American enterprise system” under “attack.”  The ideas he perceived as damaging to American business were lumped into the “statism, socialism, communism” category.  He urged businesses and their organizations to fight back on campuses, in the media, and in the courts.   CEO’s, he argued, should lead the pack:

“The day is long past when the chief executive officer of a major corporation discharges his responsibility by maintaining a satisfactory growth of profits, with due regard to the corporation’s public and social responsibilities. If our system is to survive, top management must be equally concerned with protecting and preserving the system itself. This involves far more than an increased emphasis on “public relations” or “governmental affairs” — two areas in which corporations long have invested substantial sums.”

Powell’s statement isn’t far from the adage most associated with Calvin Coolidge in 1925: “the chief business of the American people is business.”   Combine this with Herbert Hoover’s 1934 “Rugged Individualism” and we have a toxic blend of motifs which seek to justify corporate management control over the entire economy (including labor) in a social setting in which disparages cooperative and altruistic efforts and leaves individuals “on their own.”   One modern  problem with this legacy is that corporate leadership has appended a corollary:  “What’s mine is mine, and what is yours is negotiable.” [JFK]

And there’s is considerable — we have allowed the creation of Corporate Welfare Queens — with tax breaks, subsidies, no-bid contracts, anti-labor legislation, and loopholes ready to hand that facilitate hiding assets off shore.  They wish to be de-regulated, and “free” to conduct their business in the least transparent, least accountable way possible.  No “burdensome” regulation for them — meaning, of course, no Sarbanes-Oxley Act to control corporate malfeasance (Enron), no Dodd-Frank Act to control banking irregularities, no Clean Water Act, no Clean Air Act…no acts at all which might impinge on corporate profits.

They’re down with all this as long as they can convince enough people that they’ll get a trickle.

The War of Northern Aggression:   I hate to be the one to break it to the neo-confederates, but if we take Civil War era southern leaders at their word — the war really was about their Peculiar Institution, human slavery.  Even the somewhat reluctant rebel Alexander Stephens expressed the situation bluntly in his Cornerstone Speech in 1861:

“The new Constitution has put at rest forever all the agitating questions relating to our peculiar institutions—African slavery as it exists among us—the proper status of the negro in our form of civilization. This was the immediate cause of the late rupture and present revolution. Jefferson, in his forecast, had anticipated this, as the “rock upon which the old Union would split.” He was right. What was conjecture with him, is now a realized fact. But whether he fully comprehended the great truth upon which that rock stood and stands, may be doubted. The prevailing ideas entertained by him and most of the leading statesmen at the time of the formation of the old Constitution were, that the enslavement of the African was in violation of the laws of nature; that it was wrong in principle, socially, morally and politically. It was an evil they knew not well how to deal with; but the general opinion of the men of that day was, that, somehow or other, in the order of Providence, the institution would be evanescent and pass away… Those ideas, however, were fundamentally wrong. They rested upon the assumption of the equality of races. This was an error. It was a sandy foundation, and the idea of a Government built upon it—when the “storm came and the wind blew, it fell.” [Cornerstone Speech]

It doesn’t take too much cogitation to see where CSA President Jefferson Davis was headed in his inaugural address:

“The declared purpose of the compact of Union from which we have withdrawn was “to establish justice, insure domestic tranquillity, provide for the common defense, promote the general welfare, and secure the blessing of liberty to ourselves and our posterity;” and when, in the judgment of the sovereign States now composing this Confederacy, it had been perverted from the purposes for which it was ordained, and had ceased to answer the ends for which it was established, a peaceful appeal to the ballot-box declared that so far as they were concerned, the government created by that compact should cease to exist. In this they merely asserted a right which the Declaration of Independence of 1776 had defined to be inalienable; of the time and occasion for its exercise, they, as sovereigns, were the final judges, each for itself.”

By Davis’s lights the Perversion emanated from that pesky “all men are created equal” segment, a policy the southern states were loath to acknowledge.  Thus our neo-confederates are left with the sophistry of the Lost Cause publishers of the late 19th century, who sought to put a gloss on the rusting patina of antebellum southern society.  There’s not one of the Six Pillars of the Lost Cause ideology still left standing.

The residue, however, is still with us even if Pollard and his associates who dreamt up the Lost Cause have passed long ago.  The racism and bigotry which underpinned the southern reaction to the abolition of slavery still erupt, less now like explosive eruptions and rather more like the effusive eruptions slowly emitting a base which obliterates rational thought in the area.

The Lost Cause mentality informs the present day “white victimization.”  The Others must be the reason the farm was lost, the job was outsourced, or the wages have been stagnant.   All the usual suspects are rounded up — the Jewish bankers of New York City, the African American family qualifying for SNAP benefits, the urban dwellers with their strange ways and corrupt politicians.  [Salon] Those having the temerity to disagree are simply dismissed as “white haters.”

Conflations:  Nothing could be handier for the proponents of Corporate America than a segment of citizens ready and willing to believe that someone “other” than their own constituency is somehow responsible for their plight — If the Corporatists wish to shred the social safety net (Social Security, Medicare) then the phantom of the Welfare Queen, conveniently Black, is inserted into the picture.  If the Corporatists wish to indulge their financialist whims, then the phantom of the Imposing State is conjured up.

We can no more flee from our legacies than we can be convinced to part with all the ‘treasures’ in our attics, but what we should do is more house cleaning, more often.

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Senator Heller’s Pipe Dream: Fun With Deregulation

Nevada got hammered in the Housing Bubble.   Here’s what the Bubble looked like:

As the Housing Bubble collapsed so did Nevada employment. The graph looks like this:

Nevada lead the nation in home foreclosures for months on end, and it was only in January, 2012 that we were relieved to say “We’re Number Three.” [RGJ]    Why look backward?  Because in this instance the past is prologue. Lessons learned the hard way during the Savings and Loan Crisis of 1986 to 1995 were lost on bankers, builders, pundits, and politicians.

Risky Business

Does this sound familiar?  Deregulation of the Savings and Loans during the 1980’s gave the S&Ls many banking capabilities but without the regulations associated with banking.  Immediately after the deregulation of the Thrifts those that had state charters moved to federal charters because the latter were less restrictive. The states of California and Texas reduced their S&L oversight to match the federal deregulation.  The system rewarded risk. The greater the risk the greater the profits.  That is, the system was profitable until all the risky investments in real estate development started bottoming out.   The dominoes started to topple in 1985 when the Home State Savings Bank of Cincinnati, OH collapsed in March.    From 1986 to 1995 the number of Savings & Loan banks dropped from 3,234 to 1,645; and, the taxpayers were out about $124 billion dollars. [Link]

Deregulation and subsequent “innovation” in the last thirty years have given us the Savings and Loan Crisis (1986-1995), the Dot.Com Bubble from April 1997 to June 2003, [BI] the Enron Debacle and bankruptcy in December 2001, and the Mortgage Meltdown/Credit Crisis of 2008.

One would think we’d have learned something along the way, but here we have Senator Dean Heller (R-NV) touting his platform for economic growth:

“The key to turning our economy around is to remove impediments that have caused economic stagnation and the inability of businesses to create new jobs. Not continue with business as usual.”

“Dean believes that private capital, not the federal government, should be the primary source of mortgage financing for the housing market. Dean supports financial regulatory reforms that stop taxpayer-funded bailouts and address the growing liabilities of Fannie Mae and Freddie Mac.”

And, what might those impediments be? Might they be the Sarbanes-Oxley Act requiring accounting reforms and greater transparency in the wake of the Enron Debacle?  Might they be the provisions of the Dodd Frank Act, the most recent attempt to restrain some of the excesses of Wall Street during the Housing Bubble?  It’s well known Senator Heller joins his ultra-right wing cohort Senator Jim DeMint (R-SC) in proposing the repeal of the Dodd Frank Act.

Dean supports financial regulatory reforms that stop taxpayer-funded bailouts and address the growing liabilities of Fannie Mae and Freddie Mac.”  What would those “reforms” be?  If you want to stop taxpayer funded bailouts of the banking sector, simply leave the Dodd Frank Act in place since it provides for an Orderly Liquidation Authority to wind down the next Lehman Brothers mess.   No one’s all that pleased with the mortgage twins BUT if they are put out of business, WHO picks up the action in the secondary mortgage market?  JPMorganChase? Barclays Capital?

The growing liabilities of Fannie Mae?  That might have been true in 2009 but it’s outdated information now. There’s home-made chart for that:

Data from Fannie Mae, Funding Summary and Debt Outstanding, PDF.

How about Freddie Mac? Again, Senator Heller’s talking points are behind the curve.  Here’s the portion of the presentation made by Freddie Mac to its investors in June 2012 (pdf) —

A bit of Fannie and Freddie bashing is always welcome in some financial sector circles, and usually gets some applause from stump speech audiences who don’t know any better, but trying to sell the idea that we can get out from under the risky business of deregulation, and increase economic growth by dismantling the regulatory frameworks enacted to at least prevent the financial sector from repeating its recent atrocious mistakes is a pipe dream of the first water.

Senator Heller is using the  message from the Frank Luntz GOP talking point memo on financial regulation, complete with the framing: “Public outrage about the bailout of banks and Wall Street is a simmering time bomb set to go off on Election Day,” Luntz wrote. “Frankly, the single best way to kill any legislation is to link it to the Big Bank Bailout.” (emphasis added)

Unfortunately, the facts and actual provisions don’t match the linkage.  New regulations seek to PREVENT the necessity of any more major bailouts by establishing the Orderly Liquidation Authority, but if Senator Heller can string “financial reform” + “bailout” into a single sentence, and then repeat the mis-characterization often enough,  then maybe someone who doesn’t know any better will believe him.

In short: If you liked the Savings and Loan Crisis, enjoyed the Dot.com Bubble bursting, cheered for Team Enron, and loved the Housing Bubble and Mortgage Meltdown…  Senator Heller is your kind of candidate!

Relevant Previous Posts: “Nibbling Away at Sarbanes Oxley,” DB March 26, 2012. “Deregulation Debacle,” DB June 27, 2012. “A good reason not to repeal Dodd Frank OLA,” DB October 22, 2011. “Full Tilt Boogie: GOP attempts to gut Dodd Frank,” DB November 7, 2012.

See also: “Investor Presentation, Freddie Mac” June 2012. (pdf)  Sam Stein, “Frank Luntz Pens memo to kill Financial Reform,” Huffington Post, April 3, 2010.

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Filed under banking, financial regulation, Heller, Nevada economy, Nevada politics, nevada unemployment