Tag Archives: TARP

Five Reasons Senator Heller’s Vote Is No Surprise

Heller 2Senator Dean Heller (R-NV) was one of 18 members of the United States Senate to vote against a bill to end the government shutdown, and to avoid the “fiscal cliff” of default. [roll call 219] This comes as no surprise. Absolutely no surprise.

For all of Senator Heller’s posturing as Mr. Moderate, his voting record has been indicative of a banner representative of Tea Party America.

#1. NO on the bill to avoid default and end the government shutdown. (H.R. 2775)  Roll Call 219.  Why would anyone be  surprised? Senator Heller also voted against the bill to end the 2011 stalemate.  [RGJ 8/11] In the 2011 vote Senator Heller was one of 26 members voting to dive over the edge; in 2013 he was one of 18.

#2.  NO on the TARP bill.  Otherwise known as the Emergency Economic Stabilization Act, and perjoratively called the Bank Bail Out, there were two votes on this measure in the House.  After it failed on the first attempt the stock market tanked. [roll call 674] Thus advised of the economic and financial consequences of a failure to put some props under the financial sector, the House held a second vote.  Once more, then Representative Heller voted against the measure. [roll call 681]   If there has been a bit of campaign material I’ve received from Mr. Heller that has not reminded me that he was “against the bank bailout” I must have missed it.

There was much to despise about the TARP bill, however, the hard sad unavoidable fact was that our credit markets had ground themselves into a solid freeze in October 2008.  While this isn’t a particularly good analogy — think of an engine which has run out of oil — at some point the lack of liquidity creates a seizure.  There was an appalling lack of liquidity, and we were in the midst of an equally appalling seizure in capital markets.  Representative Heller voted not to add any oil to the motor.

#3. Senator Heller has been a consistent proponent of the so-called Balanced Budget Amendment.  Of all the naive and misleading proposals offered to the American public, this ranks among the most egregious.  In 2011 he joined Senator Jim DeMint (R-Heritage Action) to introduce this bit of fiscal insanity. [DB]  A “balanced budget amendment” would do nothing to help state governments, it would do nothing to promote tax equity, and nothing to make the federal government operate like the state governments. [DB] And, NO, this is NOT like your family budget! as explained here, and here.

#4. He co-sponsored S. B. 712 with Senator Jim DeMint which would have summarily  repealed all of the provisions of the financial regulation reform enacted in the Dodd-Frank law. [DB]  Rep. Michele Bachman (R-MN) introduced similar legislation in the House of Representatives.  Under the ubiquitous heading of “gettin’ rid of guv’ment regulation,” Senator Heller would have undone every effort made by the Dodd-Frank Act to rein in corporate greed, require banks to maintain adequate capital, require financial institutions to adopt plans for unwinding failed banks, and protect consumers from mortgage and other financial frauds.

What doesn’t say “Tea Party” better than teaming up with former Senator DeMint and Representative Bachmann?

#5 Senator Heller has taken a consistent position in opposition to the Affordable Care Act.

“Senator Heller would gladly allow the insurance industry to continue to offer those junk  “defined benefits” plans, to exclude infants and children with “pre-existing conditions,” to spend less than 80-85% of the premiums they take in on actual medical treatment and services.   He would repeal the tax cuts available to small businesses which offer health care insurance to their employees, and would allow the infamous “Do-nut Hole” in prescription medication coverage to reopen.”  [DB]

All the benefits of the Affordable Care Act notwithstanding, Senator Heller would happily vote to repeal the ACA.

The titans of the financial sector and the major insurance corporations haven’t been Senator Heller’s only concern, he’s also taken the side of Big Oil, voting in July 2010 to protect BP from oversight in the wake of the Gulf Oil Spill, and voted not once but 8 times to protect tax breaks for the big oil corporations.  [DB] See votes 153, vote 78, vote 80, vote 1140, vote 835, and vote 40.

Still wondering where Senator Heller stands in relation to what remains of the Republican Party?

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Filed under Economy, Heller, Nevada politics, Politics

The Big Lie of 2011 and Why It Is Important

The bankers and their allied Wall Street Warriors would very much like to have us believe that “The Problem” which spawned the Mortgage Meltdown Credit Crunch Great Recession was caused by “Government Housing Policy, Fannie Mae, and Freddie Mac.”

There is no small amount of self-serving utility in this line of argument, even if there is precious little actual evidence that this is the reason for the crash.  This territory has been covered extensively in this blog, but because of the serious ramifications inherent in adopting  The Big Lie, we ought to review.

The argument is patently false.  The extension of credit to the un-creditworthy was not the product of government housing policy, it was a perversion of it.  Wall Street discovered a taste for the fees associated with collecting mortgages — the more the merrier — parking them in “special investment vehicles” (read: off shore warehouse accounts), then slicing/dicing them into securitized assets (bonds) with various “levels” of risk. If government policy encouraged home ownership, a lá Iron Lady Margaret Thatcher’s Ownership Society, so much the better, this gave an excuse for  selling mortgages by the ton, rather than exercising any judgment about to whom the mortgages were being sold.   No one, no government agency, no government sponsored entity, no government bureau forced the banks to solicit  sales among the unworthy.

The community reinvestment banking rules simply say that a bank must make its products available to all people from whom it takes in deposits, the rules do NOT require the bank to create subprime loans, Alt-A loans, No Doc loans, or any other creative means to sell its mortgages.   We shouldn’t take this to mean that Fannie and Freddie were without blame, after all, when it became obvious they were losing market share in the secondary mortgage market the Mortgage Twins played the game with equally disastrous results as their totally private sector cohorts.

The argument is patently self-serving.  In case we’ve not noticed, the banking sector is doing rather well, Wall Street is raking in the money — even as Main Street continues to struggle.  If the Wall Street Warriors can succeed in removing all blame from the bankers then they will be able to argue against any regulation of their banking operations.  “It wasn’t OUR fault,” they cry, “therefore, we need no new regulations concerning our unmonitored use of Credit Default Swaps, no oversight of our Collateralized Debt Obligations and their origins, no consumer protection bureau in the Fed to enforce rules regarding the transparency and honesty of the financial products being sold to the general public.”

The argument is patently insulting.  The bankers, having secured tax-payer relief in the form of the Troubled Asset Relief Program/ Capital Purchase Program, would like to say, “Thank you very much, now we’ll go back to business as usual — our usual.”  While the $66 billion spent on the TARP program (CBO pdf) was a fraction of the proposed $700 billion number that has stuck in everyone’s mind, it was still a major expenditure, and it should be added to the cost of such things as the “Jamie Deal” in which JPMorganChase acquired Bear Stearns for $10 per share.  [Reuters]

The Big Lie is tantamount to arguing that the taxpayers, having bailed out the banks and guaranteed the survival of our financial sector, should smile politely and be pleased that those self-same bankers are now “job creators” and must not be inconvenienced by “onerous regulations” or any other form of regulation to insure that their misbehaviors of the past aren’t repeated in the near future.

At least Bank of America should have figured out that a bit of regulation would have gone a long way toward enhancing their bottom line.  After adding in all the settlements related to its take over of Countrywide for $4.1 billion, the bank has paid out $37,858,000,000 to date.  [BusinessInsider]

It would be far more honest to say that the “uncertainty” about which the bankers are currently moaning has less to do with the creation and implementation of rules regarding credit default swap transactions, or mortgage term transparency, and much more to do with the continuing problem of how much capital is needed in reserve to cover the costs associated with the remaining toxic assets still in the financial system.

Backward! March!  The banking lobby is fighting the implementation of the Dodd Frank Act with every tactic available.  They are fighting the funding for the Consumer Financial Protection Bureau, the appointment of a director for the CFPB, indeed the entire rationale for the CFPB.  They are fighting the efforts of the Commodity Futures Trading Commission to oversee the credit default swap transactions.  They are fighting efforts to monitor the over the counter trading of derivatives.  They are fighting against having oversight of their capacity to create systemic risk.  They are fighting any proposal for an “Orderly Liquidation Authority,” i.e. a plan to wind down bankrupt banks.

It would be very helpful for the bankers to have us believe that WE are the problem, to believe that WE bought too many homes, that OUR government is at fault, and NOT that THEY engaged in financial manipulations which created the need for consumer protection, for regulating over the counter derivatives, for monitoring systemic risk, and for creating a process for the orderly liquidation of banks on the verge of collapse.

If we give the Big Lie credibility, then WE will be authors of our next Mortgage Meltdown, Credit Crunch, and Great Recession.  When we had the tools (Dodd Frank Act) to reduce the risk to our financial system, we gave into the ideological dog whistles, cat calls, and siren songs of the financialists who promoted the false, self-serving, and insulting Big Lie.

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Several references have been mentioned in previous posts as very helpful toward understanding what happened during the period of bank deregulation and in the collapse of the financial sector in 2008.  This list includes Yves Smith, “Econned,” Palgrave-Macmillan, 2010; Michael Lewis, “The Big Short,” Norton, 2010; Roger Lowenstein, “The End of Wall Street,” Penguin Press, 2010; and Scott Patterson, “The Quants,” Crown Business, 2010.  To this list should be added:

Eisinger and Bernstein, “The Wall Street Money Machine,” Pro Publica, 2011; Greg Farrell, “The Crash of the Titans,” Crown Business, 2010;  Suzanne McGee, “Chasing Goldman Sachs,” Crown Business, 2010;  Bethany McLean and Joe Nocera, “All The Devils Are Here,” Penguin Press, 2010; Andrew Ross Sorkin, “Too Big To Fail,” Penguin Books, 2009; Vicky Ward, “The Devil’s Casino,”  Wiley & Sons, 2010.

See also: Joe Nocera, “The Big Lie,” New York Times, December 23, 2011.  Joe Nocera, “Banking’s Moment of Truth,” New York Times, June 20, 2011.  Joe Nocera, “Sheila Bair’s Bank Shot,” New York Times, July 9, 2011.  Nathaniel Popper, “Banks Step Up Spending on Lobbying,” Los Angeles Times, February 16, 2010.  Bullock & Makan, “Wall Street Gears Up For Regulatory Fight,” Financial Times, December 22, 2011.

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Filed under banking, Economy, financial regulation, housing