Tag Archives: regulation

Heck: The Bankers Good Little Soldier

Heck photo

The ad wars begin, with one from the Democratic side of the aisle noting the record of one Joe Heck, currently the Republican representative from Nevada District 3:

“The ad highlights legislation Heck sponsored as a state senator to repeal excise taxes on Nevada banks, criticizes him for accepting more than $300,000 in campaign contributions from the securities and investment industry, and portrays him as in “lockstep with Washington Republicans.”

It also notes that Heck, who now represents Nevada’s 3rd Congressional District, once called the mortgage crisis in the state “a blip on the radar” on a 2008 questionnaire.”  [LVSun]

The amount of money candidates receive from the financial industry doesn’t  bother me as much as the voting records of the candidates who receive them.  And, Representative Heck has been a very good little soldier for the financial sector interests.

Marching back to July 26, 2012 we find Representative Heck voting in favor of the interestingly titled HR 4078 “Red Tape Reduction and Small Business Job Creation Act.”  The title was commonplace, everything in those days had “small business” and “job creation” attached to the title, perhaps to obscure the fact that the Congress had done exactly diddly to create jobs or help really small businesses.  The effect would not have been small, or particularly creative.

HR 4078 would have prohibited any federal government agency from promulgating or taking “significant regulatory action,” unless the employment rate dropped below 6%, defining  “significant regulatory action” as any action that is likely to result in a rule or guidance with a fiscal effect of $50 million or more as determined by the Office of Management and Budget, or to adversely affect one of the following, including, but not limited to (Sec. 105) [PVS]  Now why would this bill illustrate Representative Heck’s allegiance to the banking sector?

Answer: Because the Dodd-Frank Act regulating the financial sector was enacted on July 21, 2010 – that would be the Wall Street Reform and Consumer Protection Act – and the agencies were in the rule making process when HR 4078 was considered in the House.  Now, what sector of the economy was going to see a $50 million dollar effect?  Here’s a clue: It’s not family owned bodegas and gas stations.  The banking industry did NOT want to see any regulation, any restraint, any inconvenience to their consumer gouging practices and HR 4078 was the result.  (And, the law if enacted would have prevented any more attempts to contain climate change – a bonus in GOP eyes.)

Move forward to October 23, 2013, and HR 2374 the “Retail Investor Protection Act.” There’s nothing in this bit of legislation that protects “retail investors.”  In fact, section 2Prohibits the Secretary of the Department of Labor from establishing a regulation that defines the circumstances under which an individual is considered a fiduciary until 60 days after the Securities and Exchange Commission establishes standards of conduct for brokers and dealers.”  Does this sound familiar? It should. It’s part and parcel of the fight to allow financial advisors to push products which improve their bottom line even if the advice isn’t in the best interests of their clients – like retirement funds.  The bankers have been fighting this right down to at least May 6, 2016.  However, the rule – now in place — has some benefits for “retail investors” as Morningstar summarizes:

“This change clearly is a victory for investors. Roughly half of retail U.S. mutual fund assets will be protected by the new, higher standards. They will not prevent bad advice, of course, nor trades from lower- to higher-cost funds. But they do command that all advice, whether successful or not, be offered in good faith, and that the rationale for all trades, whether into cheaper or pricier funds, be recorded. Such precautions will inevitably lead to better overall outcomes.”

Yes, those better overall outcomes and higher standards of responsibility for mutual funds were precisely what the bankers wanted to avoid, and exactly what Representative Joe Heck voted against on behalf of the bankers in HR 2374.

Catherine Cortez Masto It doesn’t take too much financial expertise to see which Nevada senatorial seat candidate is taking marching orders from the financial sector.  On one hand we have Joe Heck (R-NV3) who can be counted upon to find fault with the CFPB, the Dodd Frank Act, and efforts to make financial advisors account for their advice; and, on the other we have a former state Attorney General who actually Did something about that not-so-little blip that was the housing market crash/debacle in Nevada:

“2009: Cortez Masto Investigated And Found Broad Problems With The Bank Of America’s Interactions With Imperiled Borrowers. “In a complaint filed Tuesday in United States District Court in Reno, Catherine Cortez Masto, the Nevada attorney general, asked a judge for permission to end Nevada’s participation in the settlement agreement. This would allow her to sue the bank over what the complaint says were dubious practices uncovered by her office in an investigation that began in 2009. […] The breadth of the new Nevada complaint indicates that Bank of America’s problems extend throughout its mortgage operations, including origination, loan servicing and securitization. Nevada officials also found broad problems in the bank’s interactions with imperiled borrowers.” [New York Times, 8/30/11]”  [CCM]

And, there’s more. [here] What Representative Joe Heck was calling a “blip” was in reality the state of a state which led the national foreclosure rate stats for 62 straight months, and a scene in which some 58% of Nevada homeowners in 2011 were “underwater.”  Some blip.  Gee, even Representative Heck was pleased as of February 2012 with the settlement achieved in part by Cortez Masto,“Rep. Joe Heck, R-Nev., said he is ‘happy to see that an agreement was reached. At a time when Nevada families are struggling the most to make ends meet, I have high hopes that this settlement will provide them much needed relief.’ [Las Vegas Review-Journal, 2/9/12]”

There really doesn’t appear to be much question at this point which senatorial candidate is most disposed to protecting the interests of retail investors (or any other kind for that matter), and consumers of financial products (most all of us), and homeowners… we have a choice between the man who wanted to scale back the efforts of the Dodd Frank Act and CFPB and the woman who took on the Big Banks and fraudulent lenders.

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Filed under Economy, financial regulation, Heck, 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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