Tag Archives: Brian Beutler

Look, Children, It’s A Thing Spoke Of As Myth (An Actual Filibuster, Or Not)

Heather Horn at The Atlantic with the round-up.

Jordan Fabian at The Hill:

Sen. Bernie Sanders (I-Vt.) is railing against President Obama’s tax-cut package in a lengthy floor speech.

Sanders, one of the Senate’s leading liberals, is protesting Obama’s deal with Republicans, which would extend tax cuts on all income that were initially signed by President George W. Bush in 2001 and 2003.

Sanders began his speech on Friday at 10:24 a.m. and was still speaking at 5:31 p.m. Friday afternoon. He has threatened to filibuster the Obama-GOP deal when it is brought to the Senate floor next week.

“You can call what i am doing today whatever you want, you it [sic] call it a filibuster, you can call it a very long speech … ,” read a message posted on Sanders’s Twitter account after he’d taken to the rostrum.

Joe Weisenthal at Business Insider:

Update: Sanders is into hour 8.

Update 2: They’re in hour 6

Update: It’s in its 5th hour, and Senator Sanders is talking again, after having handed the baton to Mary Landrieu.

Original post: The Bernie Sanders filibuster against the tax deal is now in its 4th hour, and currently Louisiana Sen. Mary Landrieu has joined in. They’re railing against the deal, and in general inequality in America >

Just one thought: This is a disaster for Obama.

It’s the first time we can recall that something happening on the liberal side is getting people excited — #filibernie is a hot topic on Twitter right now — and Obama isn’t part of it. In fact, he’s against it.

Allah Pundit:

You’ll be pleased to know that, in his frantic search for subject matter to keep him going, he’s already somehow detoured into chatting about Arianna Huffington. If that’s where he’s at in hour six, lord only knows where he’ll be in hour twelve. Reading aloud from “Jersey Shore” transcripts, probably.

Daniel Foster at The Corner:

Regardless of the merits of Mr. Sanders’ position on the bill, this is my favored brand of filibuster-reform: make Senators actually do it. You’d retain the Senate’s best counter-majoritarian feature but see it reserved only for the most important measures.

Brian Beutler at Talking Points Memo:

It’s a filibuster as filibusters were originally intended — and, as such, makes a mockery of what the filibuster’s become: a gimmick that allows a minority of senators to quietly impose supermajority requirements on any piece of legislation.

Joined at different times by Sen. Sherrod Brown (D-OH) and Sen. Mary Landrieu (D-LA), Sanders has been decrying the Obama tax cut plan for bailing out the wealthiest people in America. “How can I get by on one house?” Sanders railed, sarcastically. “I need five houses, ten houses. I need three jet planes to take me all over the world! Sorry, American people. We’ve got the money, we’ve got the power.”

As a result of his efforts, he’s shot up to near the top Twitter trending topic chart. Filibusters like these were much more common decades ago, before the rules changed and Senators could really run out the clock by holding the floor and talking and talking without pause. Things are different today — and, whatever Sanders does, the Senate isn’t scheduled to hold any votes until Monday, so its practical effects may not amount to much.

David Dayen at Firedoglake:

It’s not a filibuster. Not unless he holds the floor until at least Monday and beyond.

There’s a set vote on the tax cut bill on Monday. Nothing else has been scheduled to move today. Bernie is not really blocking anything. This puts Sanders’ speech into the Congressional record; I’m not sure there’s an additional purpose.

But that’s not to say it isn’t important. Sanders is calling attention to the massive inequality in America, which will only be stratified further by a tax cut bill that raises taxes from current law for 25 million low-income workers and gives millionaires a tax cut of about $139,000 a person. He’s explaining America’s insane trade policies, which have cut out the American manufacturing base and hollowed out the middle class. He’s taking on corporate CEO pay, and the two-income trap, and basically making the progressive critique of an economy bought and paid for by the very rich.

What’s more, he’s picked up support, not only from usual suspects by Sherrod Brown but from conservative Democrat Mary Landrieu, who acknowledged she doesn’t always agree with her colleague but said that he has “done his homework” about the tax cut deal. After slamming the deal as unfair to the poor and to minorities and giving a very cogent argument about inequality, Landrieu hilariously concluded by saying she might vote for the bill, but she’d be “loud” about it. Nevertheless, you’re seeing issues discussed on the Senate floor that almost never come up in any other context. Political theater is sadly one of the few ways to cut through the clutter in America, and that’s what Sanders is up to, I suspect.

Andrew Leonard at Salon:

His epic rant — perhaps one of the most extraordinary critiques of how the American economy has been managed over the last several decades delivered in living memory — is an endless sequence of connecting the dots from one outrage to another. Even as I wrote this paragraph, he segued effortlessly from trade policy to Wall Street.

“But it is not just a disastrous trade policy that has brought us where we are today. The immediate cause of this crisis, and it gets me just sick talking about it … is what the crooks on Wall Street have done to the American people.”

Sanders then delivers a capsule history of deregulation, blasts Alan Greenspan, notes that in the late ’90s he had predicted everything that ultimately happened, but failed to rally legislative support to stop the runaway train — “and the rest is, unfortunately, history.”

From there, a class warfare sideswipe: “Understand, that in this country when you are a CEO on Wall Street — you can do pretty much anything you want and get away it.”

“And what they did to the American people is so horrible.”

On to the bailout! His scorn is so caustic it could disintegrate an aircraft carrier: “We bailed these guys out because they were too big to fail, and now three of the four largest banks  are now even larger. ”

As Sanders’ great oration enters its seventh hour, it is, by its very nature, impossible to summarize. It is a ramble, a rant, a critique, a cry of rage, a wail of despair, and a call to action. And it is amazing. I’ve heard stories of filibusters in which senators read phone books. And I’ve watched with disgust as for years Republicans have merely threatened to filibuster, without ever actually being forced to exercise their vocal cords. But here is Bernie Sanders, seven hours in, calling for the biggest banks to be broken up, voice still hale and hearty, and looking like he could easily go another seven hours.

Give credit to the citizens of Vermont, who know how to elect someone not afraid of speaking truth to power.

David Kurtz at Talking Points Memo:

Sen. Bernie Sanders all-day speech on the Senate floor has ended after about 8 1/2 hours.

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Gallus Gallus Domesticus Excrement

Dan Amira at New York Magazine:

“I’m trying to catch my breath so I don’t refer to this maneuver going on today as chicken crap, all right? But this is nonsense, all right?” —House Minority Leader John Boehner, on the Democrats’ holding a vote today to permanently extend the Bush tax cuts only for families making less than $250,000 or individuals making less than $200,000.

Patricia Murphy at Politics Daily:

The source of Boehner’s ire was a House vote earlier Thursday that will prevent Republicans from offering their own bill to make all of the Bush tax cuts permanent for all Americans, including the highest earners, when the full chamber considers the middle-class cuts later in the day. The House voted 213 to 203 to vote only on the middle-class tax proposal, with 32 Democrats voting with the Republicans to keep the process open.

Earlier, Rep. David Drier (R-Calif.), who offered the Republican alternative, called the Democrats’ plans to vote only on their bill “a joke.”

“I think it’s very evident that this House could, with a majority vote, ensure that we don’t increase taxes on any Americans during these very troubling, difficult economic times,” Drier said. “The fact of the matter is that any member of this House that votes in favor of the measure before us is voting for a tax increase. They are voting in favor of increasing taxes on American businesses and investors.”

Ezra Klein:

There are 238,781 households in John Boehner’s district. There are 2,824 of them with an income above $200,000. That’s 1.1 percent. And that 1.1 percent is too large, as many of those people make between $200,000 and $250,000, and so every dollar of their income will be eligible for the tax cuts the Democrats are pushing.

So in all likelihood, what separates a tax cut bill that’s “chicken crap” from a tax cut bill that’s great is its treatment of the richest 1 percent of households in Boehner’s district. And $700 billion slapped right onto the deficit. If Republicans win this debate despite the unpopularity of their position and its violent contradiction to their stated concern for the deficit, it’ll be one of the most impressive coups in recent political memory.

Brian Beutler at Talking Points Memo:

Brace yourself for some procedural jargon: Dems once believed they were faced with two mixed options for holding this vote. The first was to hold an up-or-down vote under the normal rules. But that would give Republicans the opportunity to introduce what’s known as a motion to recommit — a procedural right of the minority that would have allowed them to tack an extension of tax cuts for high-income earners on to the legislation.

The second option — suspending the rules — would have foreclosed on that right, but would have required a two-thirds majority of the House for passage: 290 votes, an impossible hurdle.

But Democrats figured out a way to avoid this. They’re attaching their tax cut plan as an amendment to a separate bill [the Airport and Airway Extension Act, to wit]. That legislation already passed the House, and has just been returned from the Senate. The rules say it can’t be recommitted. So the GOP’s hands are tied.

“The election was month ago,” Boehner said. “We’re 23 months from the next election and the political games have already started trying to set up the next election.”

“To roll this vote out really is just — it’s what you think I was going to say anyway.” In other words, “chickencrap.”

Now, Dems did make an end run around the normal rules — because there was no other way they could get their preferred tax cut plan passed. But this really is the purest way to address the question of who in Congress would say no to tax cuts for everybody unless rich people get an extra cherry on top.

David Dayen at Firedoglake:

Apparently, John Boehner described the procedural maneuvering as chicken crap today. Keep that in mind when the Republican House under him engages in exactly the same technique. I think the Dems showed the way to neutralize the motion to recommit permanently.

Oh, and the motion to recommit itself is chicken crap. It allows the minority party to spring a vote on the opposition, with no warning, without needing to show the legislative language in advance, and attach it to a bill under regular order. I don’t really like the iron-fisted rules of the House and think they could loosen them up a bit, but the motion to recommit is really obstructionist garbage, and it should be neutralized.

David Weigel:

Let’s just state the obvious: He means “chickenshit,” or wimpy. Because Democrats probably have the votes to pass this, the way they definitely had the votes to “deem and pass” the health care bill in March, before Republicans called out that strategy as a wimpy end-run around an up-or-down vote on the bill. Boehner is also right. This is chickenshit. It gives House Democrats a “victory” that wouldn’t mean anything in the Senate, even if it benefited House Democrats running in 2012.

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They Won’t Let The Sun Go Down On Them

Alexander Bolton at The Hill:

Democrats are considering a plan to delay tax hikes on the wealthy for two years because the economic recovery is slow and they fear getting crushed in November’s election.

It could mean a big reprieve for families earning $250,000 and above annually.

President George W. Bush’s tax cuts will expire at the end of the year unless Congress acts to delay their sunset.

Some Democrats are now arguing forcefully that a delay is a win-win plan that would help the federal budget without hurting the economy.

Wealthy families would not have an incentive to cut back on spending and budget writers could assume an inflow of tax funds in future years, making five- and 10-year budget projections look less scary.

Rep. John Yarmuth (D-Ky.), a member of the Ways and Means Committee, which has jurisdiction over taxes, said some of his Democratic colleagues have discussed the idea out of fear of impeding the nation’s economic recovery.

“I’ve heard some sentiment about raising the rate but not making it effective until 2012,” he said.

Derek Thompson at The Atlantic:

Sen. Kent Conrad (D., N.D.) said in an interview Wednesday that Congress shouldn’t allow taxes on the wealthy to rise until the economy is on a sounder footing. Sen. Ben Nelson (D., Neb.) said through a spokesman that he also supported extending all the expiring tax cuts for now, adding that he wanted to offset the impact on federal deficits as much as possible.

Brian Beutler at Talking Points Memo:

Has Kent Conrad done an about face and become a supporter of the Republican plan to endlessly extend tax cuts for the rich? Far from it.

“The Republicans’ proposal to me is a formula for the decline of the United States,” Conrad said last night in response to a question from TPMDC.

Conrad is among the only Senators whose hawkish rhetoric on deficits closely matches his voting record, and he surprised many — even senior members of his own party — when he was quoted widely supporting a continuation of the Bush tax cuts, including for high income earners.

“The general rule of thumb would be you’d not want to do tax changes, tax increases … until the recovery is on more solid ground,” he told reporters outside the Senate chamber yesterday afternoon.

And indeed, he reiterated that position at length when TPMDC caught up with him last night. But he also made it clear that he’s in no way supportive of the GOP position on taxes.

“In the short term, most economists would say raising taxes or cutting spending during an economic downturn is counterproductive,” Conrad said. “Now if you break it down, the high income would be the least problematic in terms of…a change in the tax rates, because they’re the least likely to spend the money. Middle income, far more important. And with [unemployment insurance], that’s actually the most important thing, because that money’s all going to get spent.”

In other words, a deficit-financed tax cut for the wealthy (as the GOP currently proposes) is the least stimulative of the options Conrad listed and ,though he’d like to preserve all of the current tax rates temporarily, tax cuts for the rich ought to be the first to go.

“[M]ost economists are saying that for the next 18 months or two years, we’re going to have continued economic weakness,” Conrad said. However, “the analysis has been done by CBO and others show that deficit-financed tax cuts actually hurt long term growth.

“I was answering what would be my reaction to the circumstance we face,” Conrad explained. “My reaction would be don’t cut spending, don’t raise taxes and that would mean on anyone. But this is the time to prepare to pivot, to put together a plan that does bring deficits and debt down over the more extended period of time.”

Jennifer Rubin at Commentary:

Nevertheless, these two plus Sen. Evan Bayh are “a departure from what appeared to be an emerging unified Democratic stance.” Maybe not so unified after all.

Remember Rep. Joe Sestak bemoaning the plight of small businesses the other day? Hmm, maybe he could join the reality-based Democrats. After all, those small businesses are the ones that will be hit if the top rate rises to 39.6%. (”Republicans and many business groups favor extending all the breaks, contending that increasing tax rates will hit small businesses hard.”) But I haven’t heard any of that from him. And really, is a guy who voted with Nancy Pelosi 97.8 percent of the time the lawmaker who is going to break with liberal orthodoxy? Not likely.

Blue Texan at Firedoglake:

Yeah, God forbid we restore the already historically low Clinton-era levels. The ’90s economy really sucked.

Jonathan Chait at TNR:

This isn’t the worst idea in the world, if they do sunset the tax cuts in 2012. There are a couple problems, though. First, it’s not a cost-effective way to stimulate the economy. The Bush tax cuts were not designed to encourage consumption. They were designed to incentivize the rich to work harder and more productively, out of the theory that Clinton-era tax rates had dampened the entrepreneurial spirit and the desire to invest. (Obviously, right? Nobody was trying to get rich in the 1990s.) Alternatively, this theory was a handy excuse to enact a policy designed to make rich people richer. In either case, nobody was claiming that it was a way to increase consumer spending. Indeed, one prevailing right-wing justification from the era was that upper-bracket tax cuts were needed because the rich save more money than the poor and middle class. (That was true, though if you want to promote saving, deficit reduction was far more efficient.)

John Cole:

We enacted these tax cuts, there was no job creation, debt exploded, and only the wealthiest of the wealthy profited. So tell me, Mr. Fiscal Conservative Kent Conrad, why should we not let the tax cuts for the rich expire?

And if it is not evident to you by now, the best way to get our finances back in order is to systematically ignore anyone who calls himself a fiscal conservative. If I could find a bank run by dirty hippies I would put my money there, because I just don’t trust these people in pinstripes anymore.

UPDATE: David Stockman at NYT

Barry Ritholtz at Big Picture

Bruce Bartlett

Sam Stein at Huffington Post

UPDATE #2: Derek Thompson at The Atlantic

Ezra Klein

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Timmy And Lizzy, Having A Tizzy

John Hudson at The Atlantic with the round-up

Shahien Nasiripour at The Huffington Post:

Treasury Secretary Timothy Geithner has expressed opposition to the possible nomination of Elizabeth Warren to head the Consumer Financial Protection Bureau, according to a source with knowledge of Geithner’s views.

The financial reform bill passed by the Senate on Thursday mandates the creation of a new federal entity charged with protecting consumers from predatory lenders.

But if Geithner has his way, the most prominent advocate for creating the agency may not be picked to lead it.

Warren, a professor at Harvard Law School whose 2007 journal article advocating the creation of such an agency inspired policymakers to enact it into law, has rocketed to prominence since the onset of the financial crisis as one of the leading reform advocates fighting on behalf of American taxpayers.

Warren has been an aggressive proponent for the bureau in public and behind the scenes, working regularly with President Barack Obama’s top advisers and the Democratic leadership in Congress. Since 2008, she has overseen the Congressional Oversight Panel, a bailout watchdog created to keep tabs on how two administrations spent hundreds of billions of taxpayer dollars to bail out Wall Street while struggling to keep distressed homeowners out of foreclosure and small businesses from collapsing.

Yet while her work on behalf of a federal unit designed solely to protect borrowers from abusive lenders has been embraced by the administration, Warren’s role as a bailout watchdog led to strained relations with the agency her panel has taken to task with brutal reports every month since Obama took office: Geithner’s Treasury Department.

It’s no secret the watchdog and the Treasury Secretary have had a tenuous relationship. Geithner’s critics have enjoyed watching Warren question him during his four appearances before her panel. Her tough, probing questions on the Wall Street bailout and his role in it — often delivered with a smile — are featured on YouTube. One video is headlined “Elizabeth Warren Makes Timmy Geithner Squirm.”

Simon Johnson at Baseline Scenario:

With his track record of survival, Geithner and his team apparently feel they can push hard against Elizabeth Warren and give the new consumer protection job to someone closer to their philosophy – which is much more sympathetic to the banking industry.

This would be a bad mistake – trying the patience of already exasperated Congressional Democrats.  If the Obama administration can’t even complete the deal they implicitly agreed with Senators over the past months, this will set of a firestorm of protest within the party (and with anyone else who is paying attention).

Financial “reform” is already very weak.  If Secretary Geithner gets his way on consumers protection, pretty much all of the Democrats efforts vis-à-vis the financial sector’s treatment of customers have been for naught.

Tim Geithner is sometimes compared to Talleyrand, the French statesman who served the Revolution, Napoleon, and the restored Bourbons – opportunistic and distrusted, but often useful and a great survivor with a brilliant personal career.  In the end, of course, no one – including Talleyrand – proves indispensible.  And everyone of this sort eventually pushes their luck too far.

If the Democratic leadership really wants to win in the November elections, they should think very hard about the further consequences of Mr. Geithner.

Dean Baker at TPM:

Undoubtedly her actions made many people in positions of power uncomfortable. But, that is exactly what we need in order for the new consumer protection agency to be effective.

The Federal Reserve Board already had the power and the responsibility to do the job that the new consumer board has been assigned. The problem was that Ben Bernanke, Alan Greenspan, and their colleagues on the Fed board (with some notable exceptions) never took this responsibility seriously. As a result, consumer protection was a joke.

Shifting the responsibility to a new board does not by itself guarantee that consumer protection in financial matters will now be treated seriously. Just ask the folks at the Mineral and Management Service about their oversight of deep-sea drilling.

Ensuring that the new board carries through its responsibilities in the way that is intended will require a leader with integrity, intelligence and independence. Elizabeth Warren clearly fits that description. Selecting anyone else will be an insult not only to her, but to all the individuals and organizations who worked so hard to bring the Consumer Financial Protection Board into existence.

Felix Salmon:

Shahien Nasiripour says, plausibly enough, that Tim Geithner is opposed to tapping Elizabeth Warren for the job, despite the fact that she’s the obvious choice. I hope he doesn’t get his way. The bureau would never have come into being without Warren pushing it hard; it’s only fair she gets a chance to run it at inception, and shape the way it does business. Even if she has been harsh in her public questioning of Geithner.

David Dayen at Firedoglake:

Boy, and bloggers are called the immature ones. Geithner gets his fee-fees hurt because Warren dares to tell the truth about the Wall Street cartel and the woefully inadequate job Treasury has done, particularly on the foreclosure crisis, and so that makes her unacceptable for a position she literally dreamed up. I think it’s time to end the fiction that the Treasury Department is in any way interested in fundamentally changing the balance of power between Wall Street and consumers. If this report is correct, Geithner is using his power to block someone who would actually make Wall Street nervous from having a position of authority.

At least one progressive group is already fighting back. The Progressive Change Campaign Committee has blasted an email to their supporters demanding that Warren be named the head of the CFPB.

As a Harvard professor, her credentials are impeccable. And she was the one who came up with the idea for the Consumer Financial Protection Bureau — perhaps the best piece of this bill — in the first place.

In short, Warren is perfect for the position and most financial insiders have just assumed she would get it. That’s why it’s so outrageous that Geithner — a longtime Wall Street insider — would attempt to sabotage her appointment.

I will be in a position to gather more information about this in the near future, not only from Treasury, but from Elizabeth Warren. It turns out I’m on a panel with her next week at Netroots Nation. We’ll talk about the Forgotten Foreclosure Crisis along with Sen. Jeff Merkley and the Huffington Post’s Ryan Grim. So if you’re in Vegas, please come out as I speak with the next head of the Consumer Financial Protection Bureau – unless Timmeh has something to say about it.

Matthew Yglesias:

I wouldn’t put a ton of stock in a story based on “a source with knowledge of Geithner’s views” but the two of them have clashed in the past so this could be the case. For example, speaking on the record earlier today Assistant Treasury Secretary for Financial Institutions Michael Barr said Narisipour’s report was wrong, and that he and Geithner both regard her as “exceptionally well-qualified.”

I’m firmly of the view that nobody is indispensable ever, and Warren is no exception to that, but there’s a good prima facie case for her. That’s because good agencies not only need good people at the top, they need good people in the middle and the bottom too. Once an agency’s been up and running for a while, this is largely a question of lock-in. Effective, high-prestige public agencies (the United States Navy, the Federal Reserve) attract a lot of motivated applicants and thus get on a self-reenforcing path of effective personnel and high prestige. But when you start something new, everything is wide open. Launching the agency with someone like Warren—a reasonably well-known high-status individual whose status among people interested in consumer financial protection is very high—will draw other committed people into the new bureau.

Paul Krugman:

There’s also a political aspect. The Obama administration suffers from the perception that it’s been too much in the pocket of Wall Street — partly because there’s at least a grain of truth to the accusation. Appointing a prominent pro-consumer crusader would have to help repair the image, while appointing somebody unknown to the public, especially when expectations are running high, would hurt.

And bear in mind that Warren really is a pioneering expert on household debt and financial distress, who has also shown an ability to work effectively in an official position. Against that, whatever personal quarrels she may or may not have had shouldn’t count at all.

Brian Beutler at TPM:

On a conference call with reporters this afternoon, President Obama’s top political adviser David Axelrod sought to calm the waters. “Elizabeth is certainly a candidate to lead it,” he said.

That sentiment was echoed this morning by Michael Barr, Assistant Treasury Secretary for Financial Institutions. “I don’t know where that came from,” he said on a conference call. “She’s been working closely with me and Secretary Geithner for a year and half to push for this consumer protection bureau. I believe and Secretary Geithner believes that she’s exceptionally well-qualified to run it.”

Geithner and Warren haven’t exactly had a warm public relationship, so the news that he has reservations, and may be trying to block her, is no surprise. Just ask Sheila Bair. But this puts the White House in a tricky spot now if it turns out Obama does not nominate her.

More Simon Johnson at Baseline Scenario:

It’s one thing to block Elizabeth Warren from heading the new Consumer Financial Protection Bureau.

It’s quite another thing to deny in public, for the record, that any such blocking is going on (e.g., see this report; Michael Barr apparently said something quite similar today).

There is a strong groundswell of opinion on this issue from the left – see the BoldProgressives petition.  But the center also feels strongly that, given everything Treasury has said and done over the past few months, it would be a complete travesty not to put the strongest possible regulator in change of protecting consumers.  (See Ted Kaufman on the NYT’s DealBook, giving appropriate credit to the SEC, and apply the same points to broader customer issues going forward.)

This can now go only one of two ways.

  1. Elizabeth Warren gets the job.  Bridges are mended and the White House regains some political capital.  Secretary Geithner is weakened slightly but he’ll recover.
  2. Someone else gets the job, despite Treasury’s claims that Elizabeth Warren was not blocked.  The deception in this scenario would be nauseating – and completely blatant.  “Everyone was considered on their merits” and “the best candidate won” will convince who exactly?

Despite the growing public reaction, outcome #2 is the most likely and the White House needs to understand this, plain and clear – there will be complete and utter revulsion at its handling of financial regulatory reform both on this specific issue and much more broadly.  The administration’s position in this area is already weak, its achievements remain minimal, its speaking points are lame, and the patience of even well-inclined people is wearing thin.

Failing to appoint Elizabeth Warren would be the straw that breaks the camel’s back.  It will go down in the history books as a turning point – downwards – for this administration.

UPDATE: John Talbott at HuffPo

Jim Newell at Gawker

UPDATE #2: Jonathan Karl and Matthew Jaffe at ABC News

Felix Salmon

Mike Konczal

Joseph Lawler at The American Spectator

UPDATE #3: Pat Garofalo at Think Progress

UPDATE #4: Noam Scheiber at TNR

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Filed under Economics, Legislation Pending, Political Figures, The Crisis

FinReg Soon To Be More Than Just A Wonky Blogger’s Twitter Tag

The round-up with Max Fisher at The Atlantic

Adam Sorensen at Swampland at Time:

By a 60-39 vote Thursday, the Senate passed legislation that re-calibrates the flow of capital through the American financial sector and provides new powers to the regulatory regime that oversees it. The final bill is the culmination of a near two-year effort launched after 2008’s Wall Street crisis thrust the nation into recession and marks the most comprehensive changes to government’s oversight of banks since the Great Depression. When Obama signs it into law next week, financial reform will join health care and the stimulus in the ranks of major Democratic initiatives enacted by the 111th Congress and boldface bullet-points on the president’s resume.

Peter Suderman at Reason:

In a victory for the hordes of Washington politicians who have been deeply committed to doing something about Wall Street (regardless of whether that something was likely to be effective), the Senate voted 60 to 38 to move forward with a significant overhaul of the nation’s financial regulations. Three of those votes came from moderate Republicans, including Cosmo-pinup Scott Brown, who, after demanding that Democrats remove a tax on banks (and replace the revenue with TARP revenue that was intended to be used to reduce the deficit), gave the bill his blessing. As predicted, once Brown came around, fellow GOP squishes centrists Olympia Snowe and Susan Collins followed. No longer just a guy with a truck, he’s now a guy with a truck who decides whether or not to massively increase the power of federal regulators over the nation’s banking system.

Annie Lowrey at The Washington Independent:

The final bill, more than 2,300 pages in length, directs regulators to create 533 rules, according to the Chamber of Commerce. The bill contains three central provisions. First, it provides the government with new powers to identify risky banking institutions and to shutter them before they harm the broader financial system, via a new systemic regulator. Henry Paulson, the Treasury Secretary under President Bush when the financial crisis first hit, lauded the provision this week. “We would have loved to have something like this for Lehman Brothers. There’s no doubt about it,” he told The New York Times, referring to the investment bank that collapsed, destabilizing the country’s financial system and contributing to the credit crunch. Democrats say this provision ends “too big to fail,” by providing the government with a way of shutting down failing banks, reassuring counterparties and containing any sense of panic.

Second, the Dodd-Frank bill makes banks less dangerous, forcing them to keep more capital on hand, banning them from making risky trades on their own behalf and keeping them from investing heavily in vehicles like hedge funds. “[The bill] places some limits on the size of banks and the kinds of risks that banking institutions can take,” President Obama told an audience of Wall Street workers this spring, speaking at Cooper Union in Manhattan. “This will not only safeguard our system against crises, this will also make our system stronger and more competitive by instilling confidence here at home and across the globe. Markets depend on that confidence. By enacting these reforms, we’ll help ensure that our financial system — and our economy — continues to be the envy of the world.”

Finally, it creates a new consumer financial protection bureau, which will have the power to create and enforce new rules regarding financial products like home-equity loans and credit cards. “Consumers finally will have a cop on the beat … that will monitor the market and write and enforce the rules,” said Susan Weinstock, the financial reform campaign director for the Consumer Federation of America. “The Wild West for financial products and services is coming to an end. Consumers will now have a bureau that will clear out the tricks and traps in financial products and services that have harmed so many Americans.”

Nicole Gelinas at The Corner:

A couple of hours before the Senate narrowly passed the Dodd-Frank fin-reg bill today, Sen. Chris Dodd, one of the bill’s two namesakes, spoke some common sense on the Senate floor:

We can’t legislate wisdom or passion. We can’t legislate competency.

Dodd did not allow this point of truth to inform the bill that he helped write, though.

The financial system’s failures made themselves obvious starting in 2007 in part because legislators and regulators thought that they could conjure up on command not only wisdom and competence but omniscience.

In the years leading up to the financial crisis, regulators allowed financial firms such as AIG to create derivatives that evaded the old-fashioned limits on borrowing and trading. The people in charge figured that the financial guys had figured out every angle and made these things perfectly safe.

Regulators, too, allowed banks to borrow far more than old-fashioned rules would have allowed on mortgage-related securities and other instruments rated AAA — because competent people had determined that such securities could never fail.

Finally, regulators allowed people to buy houses with no money down — even though we learned in the 1920s that it’s not a good idea to let people borrow limitlessly to speculate that the price of something will continue to rise.

The lesson to be learned here is that we need borrowing and trading rules that apply to everyone and everything for those times when bankers, regulators, and tens of millions of ordinary Americans aren’t right.

The bill offers no evidence that anyone in Congress has learned this lesson.

Just over a hundred years ago, the United States led the world in terms of rethinking how big business worked – and when the power of such firms should be constrained. In retrospect, the breakthrough legislation – not just for the US, but also internationally – was the Sherman Antitrust Act of 1890.

The Dodd-Frank Financial Reform Bill, which is about to pass the US Senate, does something similar – and long overdue – for banking.

Prior to 1890, big business was widely regarded as more efficient and generally more modern than small business. Most people saw the consolidation of smaller firms into fewer, large firms as a stabilizing development that rewarded success and allowed for further productive investment. The creation of America as a major economic power, after all, was made possible by giant steel mills, integrated railway systems, and the mobilization of enormous energy reserves through such ventures as Standard Oil.

But ever-bigger business also had a profound social impact, and here the ledger entries were not all in the positive column. The people who ran big business were often unscrupulous, and in some cases used their dominant market position to drive out their competitors – enabling the surviving firms subsequently to restrict supply and raise prices.

There was dominance, to be sure, in the local and regional markets of mid-nineteenth-century America, but nothing like what developed in the 50 years that followed. Big business brought major productivity improvements, but it also increased the power of private companies to act in ways that were injurious to the broader marketplace – and to society.

The Sherman Act itself did not change this situation overnight, but, once President Theodore Roosevelt decided to take up the cause, it became a powerful tool that could be used to break up industrial and transportation monopolies. By doing so, Roosevelt and those who followed in his footsteps shifted the consensus.

[…]

Why are these antitrust tools not used against today’s megabanks, which have become so powerful that they can sway legislation and regulation massively in their favor, while also receiving generous taxpayer-financed bailouts as needed?

The answer is that the kind of power that big banks wield today is very different from what was imagined by the Sherman Act’s drafters – or by the people who shaped its application in the early years of the twentieth century. The banks do not have monopoly pricing power in the traditional sense, and their market share – at the national level – is lower than what would trigger an antitrust investigation in the non-financial sectors.

Effective size caps on banks were imposed by the banking reforms of the 1930’s, and there was an effort to maintain such restrictions in the Riegle-Neal Act of 1994. But all of these limitations fell by the wayside during the wholesale deregulation of the past 15 years.

Now, however, a new form of antitrust arrives – in the form of the Kanjorski Amendment, whose language was embedded in the Dodd-Frank bill. Once the bill becomes law, federal regulators will have the right and the responsibility to limit the scope of big banks and, as necessary, break them up when they pose a “grave risk” to financial stability.

This is not a theoretical possibility – such risks manifested themselves quite clearly in late 2008 and into early 2009. It remains uncertain, of course, whether the regulators would actually take such steps. But, as Representative Paul Kanjorski, the main force behind the provision, recently put it, “The key lesson of the last decade is that financial regulators must use their powers, rather than coddle industry interests.”

And Kanjorski probably is right that not much would be required. “If just one regulator uses these extraordinary powers [to break up too-big-to-fail banks] just once,” he says, “it will send a powerful message,” one that would “significantly reform how all financial services firms behave forever more.”

Regulators can do a great deal, but they need political direction from the highest level in order to make genuine progress. Teddy Roosevelt, of course, preferred to “Speak softly and carry a big stick.” The Kanjorski Amendment is a very big stick. Who will pick it up?

Brian Beutler at Talking Points Memo:

They’re not campaigning on it in earnest — at least not yet — but Republican leaders say that, given the power, they would like to do away with Wall Street reform much like they have already discussed repealing health care reform.

“I think it ought to be repealed,” said House Minority Leader John Boehner, in response to a question from TPMDC, at his weekly press conference this morning.

One of his top lieutenants, Republican Conference Chair Mike Pence agrees. “We hope [the Senate vote] falters so we can start over,” Pence told TPMDC yesterday. “I think the reason you’re not hearing talk about efforts to repeal the permanent bailout authority is because the bill hasn’t passed yet.”

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4th Time Around

Arthur Delaney at Huffington Post:

The Senate rejected Wednesday — for the fourth time — a bill that would have reauthorized extended benefits for the long-term unemployed, by a vote of 58 to 38. Democrats will not make another effort to break the Republican filibuster before adjourning for the July 4 recess.

By the time lawmakers return to Washington, more than 2 million people who’ve been out of work for longer than six months will have missed checks they would have received if they’d been laid off closer to the beginning of the recession.

Brian Beutler at Talking Points Memo:

Sen. Ben Nelson (D-NE) last night prevented his fellow Democrats from finally passing legislation to extend needed unemployment insurance benefits to out of work Americans. It was the third time the legislation, which has been repeatedly pared down and reshaped in the hunt for votes, has failed to overcome a filibuster. But it was the first time that success or failure rested on a single deciding vote. And because Nelson, the most conservative Democrat in the Senate, joined Republicans and blocked the bill, it will likely not pass until mid-July, after the Senate returns from Independence Day recess. By then Robert Byrd’s replacement will be seated, and Dems will have the votes they need to pass their jobs bill.

Here’s what happened.

The Senate was by all accounts done for the day, and any further attempts to extend unemployment insurance would have to wait another day. But at about 8 pm, Senate Majority Leader Harry Reid decided to give it one more shot and called the vote, which had to be held open to allow Senators caught unaware to reach the chamber. When it was all said and done, the final vote was 58-38 with three Republicans not voting.

Of course, it requires 60 votes to break a filibuster, meaning Democrats were two votes shy. So why does this fall on Ben Nelson? When a cloture vote fails, the Majority Leader often switches his vote from yes to no. But he’s not joining the filibuster. It’s a parliamentary maneuver that allows him to bring the issue back to the floor easily at a later time, without having to go through the longer process of filing for cloture again.

That’s what happened last night. With the death of Robert Byrd, Democrats have 58 voting members. Last night, they were joined by Sens. Susan Collins (R-ME) and Olympia Snowe (R-ME). That would have brought them to 60, breaking the filibuster…but Nelson said no. He’s opposed the legislation repeatedly on the grounds that it’s not completely paid for (though emergency extensions of unemployment benefits are often not paid for). He brought Democrats down to 59 votes — one short of the supermajority they needed — and because of that, Reid changed his vote, drawing the total down to 58.

A day earlier, Nelson released a long statement explaining his repeated opposition to the bill.

Steve Benen:

Here’s a statement from the senator’s office:

“The bill has been revised several times already and each time the deficit spending was less. Tough choices are possible and necessary to not add to the deficit,” Nelson said. “Some also say we need more emergency spending now to keep the recovery going. But in my view it could jeopardize the recovery and would add to our already enormous deficit, likely to be around $1.4 trillion for the second year in a row.”

This is simply incoherent. Nelson talks of “tough choices,” but chooses to emphasize the deficit over the economy. He also neglects to mention that he’s supported emergency funding for the jobless before, but is reversing course at a critically important time with a fragile economy.

But when Nelson says emergency spending “could jeopardize the recovery,” it sounds an awful lot like gibberish. The conservative Nebraskan has been deeply confused about this before, and his ongoing desire to emphasize the deficit over the economy is ridiculous. We’ve come to expect such nonsense from Republicans — the ones who got us into this mess, and who created the enormous deficit in the first place — but Nelson is supposed to know better.

Even if we take the senator’s statement at face value, it suggests Nelson should vote against extended unemployment benefits. It doesn’t explain, though, why he feels compelled to back a Republican filibuster. If he’s against the extension, fine, he can oppose it. But Ben Nelson is saying that jobless Americans have to suffer because he won’t even let the bill come to the floor for a vote.

It’s just indefensible.

Meredith Jessup at Townhall:

The GOP has, on numerous occasions, said they would vote on a stand-alone measure to extend unemployment benefits.  The Republicans also suggested–gasp!–that ol’ Harry Reid and Nancy Pelosi loosen up some of the 40 % of stimulus funds that have gone unspent to help the underemployed.

Neither of these scenarios were acceptable to Dems who wanted to load the measure up with lots of other items in a pathetic attempt to get the GOP on record as being “against assistance for out-of-work Americans.”  Democrats need all this kind of help they can get for November’s elections and the AP seems more than willing to oblige.

Digby:

And it’s not just the failure to extend the unemployment benefits, it’s the reasoning behind it. There is the Rand Paul/Sharron Angle “tough love” prescription, of course, which I suspect is far more common than people will admit. (I have actually heard several conversations about somebody’s “lazy uncle” who refuses to take a job that he thinks is “beneath him.”) And then there’s the projected deficit, which throughout the Bush years of unnecessary wars, tax cuts and giveaways to their rich contributors these people said not a word, being used as an excuse to destroy the safety net. I’m hard pressed to think of a more cynical move, although the Iraq war was a helluva test run for how you can convince people not to believe their lying eyes, so perhaps this is a natural next step.

I’m guessing some of it has to do with wealth inequality and the resulting distance between the haves and have nots in everyday society. When the people who do your nails and bag your groceries and bus your table aren’t fully visible in your busy world of IPods and Blackberries, perhaps you begin to think of them as pets who need training or children who require discipline. I don’t know. But something has gone terribly wrong and decent people had better wake up and realize that this radical, nihilistic right wing ideology that calls itself “conservatism” is now in the process of bringing the cruelty of its racist past into the 21st century and applying it to the entire middle and working class of this country.

UPDATE: Paul Krugman at The New York Times

William Jacobson at Legal Insurrection

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Your Daily FinReg Centerfold

Brian Beutler at Talking Points Memo:

With the Wall Street reform legislation agreed to by House and Senate negotiators now in serious doubt in the Senate, what happens if the final bill can’t muster the votes? At his weekly press availability this morning, House Majority Leader Steny Hoyer hinted that they may have to make some changes.

“We’re trying to work with the Senate to ensure that we both take up a version that does in fact have 60 votes,” Hoyer said.

But the conference report, passed late last week, can not be amended on the House or Senate floors. It’s an up-or-down, yes-or-no proposition. If they need a new ‘version’ that has 60 votes to overcome a filibuster, they’d have to reconvene the conference committee, strip the language that offends Sen. Scott Brown (R-MA) and Sen. Susan Collins (R-ME) and try again.

Kevin Drum:

In the wake of a historic economic collapse caused largely by a financial industry allowed to run rampant, Sen. Russ Feingold (D–Wisc.) has decided to vote in favor of doing nothing at all to address this:

As I have indicated for some time now, my test for the financial regulatory reform bill is whether it will prevent another crisis. The conference committee’s proposal fails that test and for that reason I will not vote to advance it. During debate on the bill, I supported several efforts to break up ‘too big to fail’ Wall Street banks and restore the proven safeguards established after the Great Depression separating Main Street banks from big Wall Street firms, among other issues. Unfortunately, these crucial reforms were rejected. While there are some positive provisions in the final measure, the lack of strong reforms is clear confirmation that Wall Street lobbyists and their allies in Washington continue to wield significant influence on the process.

Can I vent for a minute? I know Feingold is proud of his inconoclastic reputation. I know this bill doesn’t do as much as he (or I) would like. I know the financial industry, as he says, continues to have way too much clout on Capitol Hill.

But seriously: WTF? This is the final report of a conference committee. There’s no more negotiation. It’s an up-or-down vote and there isn’t going to be a second chance at this. You either vote for this bill, which has plenty of good provisions even if doesn’t break up all the big banks, or else you vote for the status quo. That’s it. That’s the choice. It’s not a game. It’s not a time for Feingold to worry about his reputation for independence. It’s a time to make a decision between actively supporting something good and actively supporting something bad. And Feingold has decided to actively support something bad.

Scott Brown, the junior Senator from Mass:

Dear Chairman Dodd and Chairman Frank,

I am writing you to express my strong opposition to the $19 billion bank tax that was included in the financial reform bill during the conference committee. This tax was not in the Senate version of the bill, which I supported. If the final version of this bill contains these higher taxes, I will not support it.

It is especially troubling that this provision was inserted in the conference report in the dead of night without hearings or economic analysis.  While some will try to argue this isn’t a tax, this new provision takes real money away from the economy, making it unavailable for lending on Main Street, and gives it to Washington. That sounds like a tax to me.

I have always strongly opposed a bank tax because, as the non-partisan CBO has said, costs would be passed onto the millions of American consumers and small businesses who rely on major U.S. financial institutions for their checking, ATM, loans or other services.  This tax will be paid by consumers who will have to pay higher fees and the small businesses that won’t get the funding they need to invest and create jobs.

Imposing this new tax is the wrong option. Our economy is still struggling. It is wrong to impose higher taxes and ignore the impact it will have on our economy without considering other ways we might offset the costs of the measure.  I am asking that the conference committee find a way to offset the cost of the bill by cutting unnecessary federal spending. There are hundreds of billions in unspent federal funds sitting around, some authorized years ago for long-dead initiatives. Congress needs to start to looking there first, and I stand ready to help.

Sincerely,

Senator Scott P. Brown

John Carney at CNBC:

Democrats on Tuesday planned to strip out a controversial tax from their landmark financial reform bill in order to win the swing votes needed to pass it through Congress.

With crucial Republican moderates threatening to withdraw their support, Democrats were weighing alternative ways to fund the most sweeping rewrite of the Wall Street rulebook since the 1930s.

Though a supposedly final version of the bill had been hammered out last week, Democrats in charge of the process called a fresh negotiating session, which got under way shortly after 5 p.m. EDT Tuesday.

Democratic lawmakers and aides said they planned to remove a $17.9 billion tax on large financial institutions. Instead, they would cover most of the bill’s costs by shutting down a $700 billion bank-bailout program.

“I haven’t talked to everybody, but I gather from a number of people they like this option,” said Democratic Senator Christopher Dodd, one of the lawmakers in charge of the bill.

The bill had been expected to pass both chambers of Congress this week in time for President  Obama to sign it into law by July 4. But supporters have been forced to scramble for votes in the Senate, putting that goal in jeopardy.

Analysts said while that timetable may slip, the bill was still likely to become law.

“We believe that this legislation will pass, timing and the bank tax remain the final question marks,” wrote FBR Capital Markets analyst Edward Mills in a research note.

Jay Newton-Small at Time:

Senate Banking Committee Chairman Chris Dodd stood an hour ago in the Senator’s Retiring Room off of the Senate floor in an intense conversation with Massachusetts Senator Scott Brown – one of surely many they will have today. Dodd is trying to get Brown, one of four Republicans who voted for the Senate version of financial regulatory reform, to pledge his support for final passage. House and Senate negotiators last week worked out a deal to combine the two measures only to find that Brown couldn’t support $18+ billion in new bank fees. To complicate matters, Democrats are now down a vote due to the untimely death of Senator Robert Byrd, a West Virginia Democrat.

Dodd, a Connecticut Democrat, and House Financial Service Chairman Barney Frank are planning on taking the unusual step of reopening the conference committee this afternoon. Lucky for them it wasn’t formally closed or reopening it would’ve taken votes from both chambers of Congress. They have been negotiating with the four Republicans – Brown, Maine Senators Olympia Snowe Susan Collins and Iowa’s Chuck Grassley — on new offsets for the $18+ billion. Dodd says that 90% of the $18+ billion would now be paid for by the immediate end of TARP, the unpopular bank bailout fund due to expire October 3. The additional offset would come from raising fees the banks pay to the Federal Deposit Insurance Corporation, exempting all small banks under $10 billion capitalization (Dodd says he’s spoke to Sheila Bair on this and she’s fine with it). Some Republicans still have reservations that such a move, though, wouldn’t prompt the banks to pass the cost on to consumers. “Repealing TARP definitely appeals to me,” says Snowe, who met with Dodd in her office last night and again this morning.  “At this point other issues are not related to the TARP part, we’re still looking at how you replace those fees. So things are still in motion here, there are a lot of conservations developing.”

Brown, emerging from his meeting with Dodd, says he’s waiting to see the final product and hasn’t made any decisions yet. Brown sent Dodd and Frank a letter this morning announcing his opposition to the $18+ billion in fees, prompting today’s dramatics. Collins told reporters she was pleased with her meetings with Dodd but that she also had made no final decision. Grassley was nowhere to be found. “I gather there were a number of people who were uneasy with the earlier pay-for who like this alternative and so the present plan is to probably reconvene the conference this afternoon,” Dodd said, heading into a meeting in Senate Majority Leader Harry Reid’s offices. If all four Republicans sign on, Dems should have enough votes to pass the Senate as they race to finish the legislation by the end of the week.

Annie Lowrey at The Washington Independent:

Rather than charging the hedge funds and big banks considered most responsible for the financial crisis a reasonable fee for implementation, the conference committee will settle for ending a government stability program and spreading the pain around to all federally insured banks — including small community-focused banks — to satisfy the demands of one Republican. So it goes in Washington.

Felix Salmon:

It would be a fiasco of tragic proportions if the banks managed to remove these taxes from the final bill, essentially absolving themselves from cleaning up after their own mess. The arguments against the taxes are weak indeed: either you simply oppose all taxes on principle (which seems to be the Scott Brown stance, and which is fiscally disastrous), or else you’re forced into John Carney’s corner.

Carney is worried that we don’t know exactly where the tax will be applied — but that’s a feature, not a bug. Setting up the tax in great deal ex ante is essentially just asking banks to spend millions of dollars on tax consultants who can help them skirt the new levies. And as the risks in the system evolve and change, so to should the way that they’re taxed. It’s right and proper that the newly created Council for Financial Stability will be charged with taxing systemic risk, rather than having a bunch of politicians try to do so at the beginning and then watch as the banks and other financial institutions nimbly sidestep the new taxes.

An increase in the FDIC premium would be a gift on a platter to banks like Goldman Sachs and Morgan Stanley which don’t have insured deposits — not to mention non-bank players like Citadel which are systemically very important. I’m unclear on what exactly this Republican “procedural hurdle” is — I thought that after reconciliation, you just needed a simple majority to pass a bill. But I’m getting very annoyed about it.

UPDATE: Russell Berman at The Hill

UPDATE #2: Eric Zimmermann at The Hill

Noam Scheiber at TNR

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