Jonathan Tasini

    Chris Dodd has put his regulatory reform bill on the table. Bottom line: it is, at best, average--and certainly does not do what needs to be done to remake the rules of the economy.

    The biggest flaw, in my opinion, is giving the Federal Reserve Board more power, particularly placing consumer protection in the hands of the Fed--rather than in the hands of an independent Consumer Financial Protection Agency, a proposal that the Administration had laid on the table that I thought was a very good idea. It simply is not conceivable to me that the Fed will be a serious place for the defense of consumers' rights. After all, it's the Fed that was asleep at the wheel as the seeds of the financial crisis were sown--by the very circle that has enormous influence with the Fed, either by literally having people who sit on the Fed's governing board, or its regional banks, or by simply having the ear of those people who run the Fed.

    When was the last time someone you knew had the ability to influence the Fed?

   Second issue: while the Fed would oversee with more authority institutions with more than $50 billion in assets and have the power to seize and break up failing insitutions, the legislation does not do what I believe needs to be done--take a part the basic model of big banks and replace our banking system with regional and community banks. The big bank model is a failure because bankers of the Citibank philosophy (read: Robert Rubin) will be less attuned to the average person down the street than they are to the market and monetary manipulations that happen half way around the world.

    The Dodd bill only modestly addresses the core problems in our financial system.

I have been dismayed at the willingness to let the Wall Street executives off the hook--allowing them to walk free, continue to collect bonuses and salaries and even give them jobs in government after they conducted what was perhaps the biggest fraud in financial history. We cannot let them escape justice. And, based on the evidence released today, we need to start with Lehman Brothers, and in particular Richard Fuld, the former CEO.

  Here is what an independent bank examiner concludes:

But the examiner, Anton R. Valukas, also for the first time laid out what the report characterized as "materially misleading" accounting gimmicks that Lehman used to mask the perilous state of its finances. The bank’s bankruptcy, the largest in American history, shook the financial world. Fears that other banks might topple in a cascade of failures eventually led Washington to arrange a sweeping rescue for the nation’s financial system.

According to the report, Lehman used what amounted to financial engineering to temporarily shuffle $50 billion off its books in the months before its collapse in September 2008 to conceal its dependence on leverage, or borrowed money. Senior Lehman executives, as well as the bank’s accountants at Ernst & Young, were aware of the moves, according to Mr. Valukas, a partner at the law firm Jenner & Block, who filed the report in connection with Lehman’s bankruptcy case.

Richard S. Fuld Jr., Lehman’s former chief executive, certified the misleading accounts, the report said.

"Unbeknownst to the investing public, rating agencies, government regulators, and Lehman’s board of directors, Lehman reverse engineered the firm’s net leverage ratio for public consumption," Mr. Valukas wrote.

Mr. Fuld was "at least grossly negligent," the report states. Henry M. Paulson Jr., who was then the Treasury secretary, warned Mr. Fuld that Lehman might fail unless it stabilized its finances or found a buyer.

Lehman executives engaged in what the report characterized as "actionable balance sheet manipulation," in addition to "nonculpable errors of business judgment." [emphasis added]

  The report does not make any judgment whether Fuld and other executives committed felonies or other violations of securities' law. But, as The Wall Street Journal reports:

The Manhattan and Brooklyn U.S. attorney's offices are investigating, among other things, whether former Lehman executives misled investors about the firm's financial picture before it filed for bankruptcy protection, and whether Lehman improperly valued its real-estate assets, people familiar with the matter have said.

  With the caveat that I am not a securities law expert, it is hard not to read the excerpts from the report and come away believing that there is not enough evidence for an indictment and a trial before a jury.

  The millions of people who lost their life savings deserve a trial of the people who participated in this fraud.

  The millions of people who lost their jobs because of the greed and fraud that caused the economic crisis deserve a trial of those responsible.

  Before our very eyes, in Washington, reform of the financial system is being sliced and diced. We cannot let this happen. Too many Democrats continue to accept huge amounts of legalized corruption from the very people who participated in the Wall Street casino game. We have to stop this. Now.

  Until the system is reformed (short of complete public financing of campaigns), Democrats must stop taking money from Wall Street, the banks and rest of the financial interests who are buying votes to stop significant, meaningful reform. They are trying to even scuttle the very modest bank tax proposed by the president, not to mention a more significant financial transactions tax.

  We got into this mess, in part, because our political system oiled the way for a predictably dangerous de-regulation of the industry. We can't let this happen again.

   The question must be asked as well: what did Tim Geithner know about this fraud? Naked Capitalism has this demand:

We need to demand an immediate release of the e-mails, phone records, and meeting notes from the NY Fed and key Lehman principals regarding the NY Fed’s review of Lehman’s solvency. If, as things appear now, Lehman was allowed by the Fed’s inaction to remain in business, when the Fed should have insisted on a wind-down (and the failed Barclay’s said this was not infeasible: even an orderly bankruptcy would have been preferrable, as Harvey Miller, who handled the Lehman BK filing has made clear; a good bank/bad bank structure, with a Fed backstop of the bad bank, would have been an option if the Fed’s justification for inaction was systemic risk), the NY Fed at a minimum helped perpetuate a fraud on investors and counterparties.

   Conventional wisdom--along with a great dose of greed and blind faith in a failed economic model--caused the immediate economic crisis we are still deeply mired in. Every day, brings another does of conventional wisdom. Here is one from The Wall Street Journal:

U.S. household wealth fell by $14 trillion during the recession, sapping confidence and holding back consumer spending. Now, it is staging a comeback...

Household net worth plummeted during the recession thanks to sharp declines in real estate and financial assets such as stocks, falling to a low of $48.5 trillion in the first quarter of 2009.

The massive decline knocked out a key support for consumer spending at a time when labor market and credit conditions were worsening rapidly. Monthly consumer spending fell as much as 2% last May compared with the prior year—the worst reading of the recession—after posting gains of more than 7% during the boom.

   The conventional wisdom will look at any rise in the stock market and/or any signs of life in the housing market as a sign things are improving. But, that is a conventional wisdom at the immediate reality and is ignorant of a 30-year crisis. Until we have an honest debate in the country--which we are not having--about the roots of the three-decade long slide in wages, we will only kick down the road--again--a reckoning with a failed economic model.

   We can't let that happen.

   In February 1960, Dr. Martin Luther King sent this to 11 jailed protestors:

I HAVE JUST LEARNED OF YOUR COURAGEOUS WILLINGNESS TO GO TO JAIL INSTEAD

I HAVE JUST LEARNED OF YOUR COURAGEOUS WILLINGNESS TO GO TO JAIL INSTEAD

OF PAYING FINES FOR YOUR RIGHTEOUS PROTEST AGAINST SEGREGATED

EATING FACILITIES. THROUGH THIS DECISION YOU HAVE AGAIN PROVEN THAT THERE IS NOTHING MORE MAJESTIC AND SUBLIME THAN THE DETERMINED COURAGE OF INDIVIDUALS WILLING TO SUFFER AND SACRIFICE FOR THE CAUSE OF FREEDOM. YOU HAVE DISCOVERED ANEW THE MEANING OF THE CROSS, AND AS CHRIST DIED TO MAKE MEN HOLY, YOU ARE SUFFERING TO MAKE MEN FREE. AS YOU SUFFER THE INCONVENIENCE OF REMAINING IN JAIL, PLEASE REMEMBER THAT UNEARNED SUFFERING IS REDEMPTIVE. GOING TO JAIL FOR A RIGHTEOUS

CAUSE IS A BADGE OF HONOR AND A SYMBOL OF DIGNITY. I ASSURE YOU

THAT YOUR VALIANT WITNESS IS ONE OF THE GLOWING EPICS OF OUR TIME AND YOU ARE BRINGING ALL OF AMERICA NEARER THE THRESHHOLD O F T H E WORLD’S BRIGHT TOMORROWS.

   If he was alive today, he would have been with the other 5,000 people at the rally yesterday in D.C. to protest a meeting of the CEOs of the insurance industry who were gathered at the posh Ritz Carlton (no harm to yours truly was done):

   In February 1960, Dr. Martin Luther King sent this to 11 jailed protestors:

I HAVE JUST LEARNED OF YOUR COURAGEOUS WILLINGNESS TO GO TO JAIL INSTEAD

I HAVE JUST LEARNED OF YOUR COURAGEOUS WILLINGNESS TO GO TO JAIL INSTEAD

OF PAYING FINES FOR YOUR RIGHTEOUS PROTEST AGAINST SEGREGATED

EATING FACILITIES. THROUGH THIS DECISION YOU HAVE AGAIN PROVEN THAT THERE IS NOTHING MORE MAJESTIC AND SUBLIME THAN THE DETERMINED COURAGE OF INDIVIDUALS WILLING TO SUFFER AND SACRIFICE FOR THE CAUSE OF FREEDOM. YOU HAVE DISCOVERED ANEW THE MEANING OF THE CROSS, AND AS CHRIST DIED TO MAKE MEN HOLY, YOU ARE SUFFERING TO MAKE MEN FREE. AS YOU SUFFER THE INCONVENIENCE OF REMAINING IN JAIL, PLEASE REMEMBER THAT UNEARNED SUFFERING IS REDEMPTIVE. GOING TO JAIL FOR A RIGHTEOUS

CAUSE IS A BADGE OF HONOR AND A SYMBOL OF DIGNITY. I ASSURE YOU

THAT YOUR VALIANT WITNESS IS ONE OF THE GLOWING EPICS OF OUR TIME AND YOU ARE BRINGING ALL OF AMERICA NEARER THE THRESHHOLD O F T H E WORLD’S BRIGHT TOMORROWS.

   If he was alive today, he would have been with the other 5,000 people at the rally yesterday in D.C. to protest a meeting of the CEOs of the insurance industry who were gathered at the posh Ritz Carlton (no harm to yours truly was done):

   This was inevitable and quite worrisome:

Companies are quietly and gradually moving their pension funds out of stocks. They want to reduce their investment risk and are buying more long-term bonds.

But states and other bodies of government are seeking higher returns for their pension funds, to make up for ground lost in the last couple of years and to pay all the benefits promised to present and future retirees. Higher returns come with more risk.

“In effect, they’re going to Las Vegas,” said Frederick E. Rowe, a Dallas investor and the former chairman of the Texas Pension Review Board, which oversees public plans in that state. “Double up to catch up.”

Though they generally say that their strategies are aimed at diversification and are not riskier, public pension funds are trying a wide range of investments: commodity futures, junk bonds, foreign stocks, deeply discounted mortgage-backed securities and margin investing. And some states that previously shunned hedge funds are trying them now.[emphasis added]

   If te crash of the market wasn't enough to endanger pension funds, now, the pressure to recoup may ignite a double hit on the retirement of millions of Americans.

   This was inevitable and quite worrisome:

Companies are quietly and gradually moving their pension funds out of stocks. They want to reduce their investment risk and are buying more long-term bonds.

But states and other bodies of government are seeking higher returns for their pension funds, to make up for ground lost in the last couple of years and to pay all the benefits promised to present and future retirees. Higher returns come with more risk.

“In effect, they’re going to Las Vegas,” said Frederick E. Rowe, a Dallas investor and the former chairman of the Texas Pension Review Board, which oversees public plans in that state. “Double up to catch up.”

Though they generally say that their strategies are aimed at diversification and are not riskier, public pension funds are trying a wide range of investments: commodity futures, junk bonds, foreign stocks, deeply discounted mortgage-backed securities and margin investing. And some states that previously shunned hedge funds are trying them now.[emphasis added]

   If te crash of the market wasn't enough to endanger pension funds, now, the pressure to recoup may ignite a double hit on the retirement of millions of Americans.

   Here is a contrast: the Congress passed a $15 billion jobs bill that could charitably be called pathetic--it *might* create a couple of hundred thousands new jobs, when we need almost 11 million jobs just to get back to pre-crisis levels. On the other hand, any health care reform bill that seems like it might squeak through would hand the insurance industry tens of billions of dollars in new profits from all the people who will now be forced to buy insurance at insurance industry price--this is the industry that has bankrupted people and business all over the nation.

   Is there something wrong with this picture?

   Here is a contrast: the Congress passed a $15 billion jobs bill that could charitably be called pathetic--it *might* create a couple of hundred thousands new jobs, when we need almost 11 million jobs just to get back to pre-crisis levels. On the other hand, any health care reform bill that seems like it might squeak through would hand the insurance industry tens of billions of dollars in new profits from all the people who will now be forced to buy insurance at insurance industry price--this is the industry that has bankrupted people and business all over the nation.

   Is there something wrong with this picture?

The greatest threat to our future is the way in which we let certain trends and norms become an almost accepted way the economy works. For example, the poverty-level minimum wage is rarely challenged and it is a fundamental part of the strategy of business in America--and a core reason for the greatest divide between rich and poor in 100 years. Today, in recognition of International Women's Day, I want to raise the on-going reality that women are still paid less than men--and that is a global truth.

  The facts of this widespread discrimination comes via a report by the International Labor Organization--an organization which does some incredible research and advocacy that does not get enough attention in this country because the traditional media has a disdain for actual facts about workers' lives--as opposed to the traditional media's incessant trumpeting of the glories of the "free market"--and I imagine a general disdain in the press, and among too many of our elected insiders, for anything remotely associated with the United Nations.

  The report is a bit wonky but here are the things I picked out that I share with you for thought and discussion.

  It's a fact that women bear the overwhelming burden of unpaid care work. And look at the value of that work:
 

Estimates show that the value of unpaid care work (also called unpaid household work) can be equivalent to at least half of a country’s GDP. As noted in the ILC report on gender equality in 2009, governments depend on
unpaid care work to reduce the financial burden on the State. It is females that perform most of this work and this reality poses one of the biggest barriers to equality for women.

  In other words, the uncompensated work that falls disproportionately on women is effectively a massive subsidy that women give to society. Our government needs to have a much more aggressive push to value that work and compensate for it (and that is something I am interested in pushing in the Senate). Again, this is about VALUING what exists--and not ignoring the clear economic benefit that uncompensated care contribute to the economy (we have examples all over the economy of the willful ignorance of value--in a negative way, too many businesses never bear the hidden costs of pollution, which contributes, by omission, to profit and the bottom line).

   Second important fact. The bigger picture of the push to lower wages and make work less stable and less full-time--partly oiled by so-called "free trade" which is simply about pushing down wages--has hit women hardest:

Part-time employment
There has been a big increase in part-time employment in developed economies over the last 20 years, with shares much higher for women than men (see section 3.3.5 for more information).
The informal economy
Informal and formal work should not be understood as dichotomous, but as intimately linked and frequently overlapping. The ILC 2009 report on Gender equality at the heart of decent work noted that informal and formal
work exists along a continuum, with informal work lying outside the regulatory framework. The informal economy includes both own-account workers and wage workers and cuts across all sectors. The informal
sector has generally higher shares of females, although the lack of regular statistics on the topic makes it difficult to judge definitively (see section 3.3.4 for more information).
Home work
Home-based work can be a voluntary choice in developed countries. However, it is often a survival strategy in developing countries. Women engage in home work out of economic need and are forced to cope with the accompanying long hours, poor pay, limited access to social protection and associated safety and health problems. With globalization, home work is increasing, especially among women.[emphasis added]

   Third important fact. And alert--here I go praising the Europeans, a political risk of major proportions. Because women still bear the larger responsibility of child-rearing, they are more likely to be forced to seek and accept part-time work. The Dutch saw this trend and rather than just accept that part-time work would mean a complete sacrifice:

A series of laws and collective agreements instituted in the early 1990s have created a situation in which part-time workers are subject to a statutory minimum wage and minimum holiday allowance, equal treatment in wages, overtime payments, bonuses and training. Thus, part-time employment has become not just an "only" option for Dutch women but a "desirable" option that allows them to balance work and family life without sacrificing the benefits that were traditionally a full-timer privilege only.

  In no way should this mean that men should shirk equal sharing of child-rearing. Rather, I view this as a way in which women--as well as men--who actually chose to devote more time to raise families can have a decent protection that is, yes, encouraged by the government.

  Fourth important point. I have been skeptical about the emphasis on education as a salvation for economic injustice. In my opinion, the crisis in work is not that people aren't smart enough--it's that we are handcuffed by a system that drains wealth to the very few and encourages wage depression. And this point, then, screams out:

In many countries the female labour force is generally better educated than the male labour force. At the same time, the data show a much greater tendency for the educated woman, at both the tertiary and secondary levels, to face unemployment than men with the same education level. Yes, women are making great progress in gaining access to education and yes, the trend is for more women to become economically active, but in terms of numbers alone, the balance is still strongly in favour of men.

  Translation: women, even as they are BETTER educated than men, still don't have equality in getting work and being paid equally.

  This might be a place to give peoples' own examples of the continuing injustice in pay and employment. I'd like to hear those stories (you can post them here or email me at jonathan@jonathantasini.com)

The greatest threat to our future is the way in which we let certain trends and norms become an almost accepted way the economy works. For example, the poverty-level minimum wage is rarely challenged and it is a fundamental part of the strategy of business in America--and a core reason for the greatest divide between rich and poor in 100 years. Today, in recognition of International Women's Day, I want to raise the on-going reality that women are still paid less than men--and that is a global truth.

  The facts of this widespread discrimination comes via a report by the International Labor Organization--an organization which does some incredible research and advocacy that does not get enough attention in this country because the traditional media has a disdain for actual facts about workers' lives--as opposed to the traditional media's incessant trumpeting of the glories of the "free market"--and I imagine a general disdain in the press, and among too many of our elected insiders, for anything remotely associated with the United Nations.

  The report is a bit wonky but here are the things I picked out that I share with you for thought and discussion.

  It's a fact that women bear the overwhelming burden of unpaid care work. And look at the value of that work:
 

Estimates show that the value of unpaid care work (also called unpaid household work) can be equivalent to at least half of a country’s GDP. As noted in the ILC report on gender equality in 2009, governments depend on
unpaid care work to reduce the financial burden on the State. It is females that perform most of this work and this reality poses one of the biggest barriers to equality for women.

  In other words, the uncompensated work that falls disproportionately on women is effectively a massive subsidy that women give to society. Our government needs to have a much more aggressive push to value that work and compensate for it (and that is something I am interested in pushing in the Senate). Again, this is about VALUING what exists--and not ignoring the clear economic benefit that uncompensated care contribute to the economy (we have examples all over the economy of the willful ignorance of value--in a negative way, too many businesses never bear the hidden costs of pollution, which contributes, by omission, to profit and the bottom line).

   Second important fact. The bigger picture of the push to lower wages and make work less stable and less full-time--partly oiled by so-called "free trade" which is simply about pushing down wages--has hit women hardest:

Part-time employment
There has been a big increase in part-time employment in developed economies over the last 20 years, with shares much higher for women than men (see section 3.3.5 for more information).
The informal economy
Informal and formal work should not be understood as dichotomous, but as intimately linked and frequently overlapping. The ILC 2009 report on Gender equality at the heart of decent work noted that informal and formal
work exists along a continuum, with informal work lying outside the regulatory framework. The informal economy includes both own-account workers and wage workers and cuts across all sectors. The informal
sector has generally higher shares of females, although the lack of regular statistics on the topic makes it difficult to judge definitively (see section 3.3.4 for more information).
Home work
Home-based work can be a voluntary choice in developed countries. However, it is often a survival strategy in developing countries. Women engage in home work out of economic need and are forced to cope with the accompanying long hours, poor pay, limited access to social protection and associated safety and health problems. With globalization, home work is increasing, especially among women.[emphasis added]

   Third important fact. And alert--here I go praising the Europeans, a political risk of major proportions. Because women still bear the larger responsibility of child-rearing, they are more likely to be forced to seek and accept part-time work. The Dutch saw this trend and rather than just accept that part-time work would mean a complete sacrifice:

A series of laws and collective agreements instituted in the early 1990s have created a situation in which part-time workers are subject to a statutory minimum wage and minimum holiday allowance, equal treatment in wages, overtime payments, bonuses and training. Thus, part-time employment has become not just an "only" option for Dutch women but a "desirable" option that allows them to balance work and family life without sacrificing the benefits that were traditionally a full-timer privilege only.

  In no way should this mean that men should shirk equal sharing of child-rearing. Rather, I view this as a way in which women--as well as men--who actually chose to devote more time to raise families can have a decent protection that is, yes, encouraged by the government.

  Fourth important point. I have been skeptical about the emphasis on education as a salvation for economic injustice. In my opinion, the crisis in work is not that people aren't smart enough--it's that we are handcuffed by a system that drains wealth to the very few and encourages wage depression. And this point, then, screams out:

In many countries the female labour force is generally better educated than the male labour force. At the same time, the data show a much greater tendency for the educated woman, at both the tertiary and secondary levels, to face unemployment than men with the same education level. Yes, women are making great progress in gaining access to education and yes, the trend is for more women to become economically active, but in terms of numbers alone, the balance is still strongly in favour of men.

  Translation: women, even as they are BETTER educated than men, still don't have equality in getting work and being paid equally.

  This might be a place to give peoples' own examples of the continuing injustice in pay and employment. I'd like to hear those stories (you can post them here or email me at jonathan@jonathantasini.com)

   The issue of trade has sort of receded into the background. Yesterday, though, Sen. Sherrod Brown made clear that he is not thrilled with the Administration's stance:

For too long, our country has followed a Golden Rule trade policy: we treat others as we’d like them to treat us.  That’s a great rule for interpersonal relations, but it’s a disaster for international trade relations.
 
“While I appreciate that the President’s Trade Agenda is strong on trade enforcement and reciprocity, there is no emphasis on ensuring that the trade policies we are pursuing actually benefit the United States.  We still need Ambassador Kirk to develop an action plan to address any negative effects from existing trade agreements.
 
“I’ve introduced The Trade Reform, Accountability, Development and Employment (TRADE) Act which would provide for a thorough review of our trade agreements. We need hard data on the effect our trade agreements have on American wages and jobs, so that we know what we are getting ourselves into before we move forward. We must craft our trade policy around what’s right for American workers and American businesses. I am concerned that, instead, we will cling to the same trade agreement models that have produced such poor results.  
 
“The Administration appears to be moving forward on a trade agenda without showing how it would reduce the trade deficit and create new jobs. I support the President’s National Export Initiative of doubling exports within five years, but we need to look at both sides of the trade equation. We must address the inequities in our trade policy that have resulted in record trade deficits and lost jobs. If we are going to have an aggressive export strategy, we must be willing to use all tools available – which include invoking Super 301 authority and combating currency manipulation – to advance our economic interests.”

   A footnote to the TRADE Act's prospects. Last fall, I wrote that Charles Rangel was among the people trying to derail or at least slow down the passage of the TRADE Act, using his perch as chair of the Ways and Means Committee. Hmmm...

   The issue of trade has sort of receded into the background. Yesterday, though, Sen. Sherrod Brown made clear that he is not thrilled with the Administration's stance:

For too long, our country has followed a Golden Rule trade policy: we treat others as we’d like them to treat us.  That’s a great rule for interpersonal relations, but it’s a disaster for international trade relations.
 
“While I appreciate that the President’s Trade Agenda is strong on trade enforcement and reciprocity, there is no emphasis on ensuring that the trade policies we are pursuing actually benefit the United States.  We still need Ambassador Kirk to develop an action plan to address any negative effects from existing trade agreements.
 
“I’ve introduced The Trade Reform, Accountability, Development and Employment (TRADE) Act which would provide for a thorough review of our trade agreements. We need hard data on the effect our trade agreements have on American wages and jobs, so that we know what we are getting ourselves into before we move forward. We must craft our trade policy around what’s right for American workers and American businesses. I am concerned that, instead, we will cling to the same trade agreement models that have produced such poor results.  
 
“The Administration appears to be moving forward on a trade agenda without showing how it would reduce the trade deficit and create new jobs. I support the President’s National Export Initiative of doubling exports within five years, but we need to look at both sides of the trade equation. We must address the inequities in our trade policy that have resulted in record trade deficits and lost jobs. If we are going to have an aggressive export strategy, we must be willing to use all tools available – which include invoking Super 301 authority and combating currency manipulation – to advance our economic interests.”

   A footnote to the TRADE Act's prospects. Last fall, I wrote that Charles Rangel was among the people trying to derail or at least slow down the passage of the TRADE Act, using his perch as chair of the Ways and Means Committee. Hmmm...

Yesterday, I raised my concerns about the Senate's proposal to hand more power to the Federal Reserve Board and give the Fed the role of protecting consumers. Honestly, I thought it was a cruel joke and a perfect example of the Washington insiders protecting the interests of Wall Street. Barney Frank agrees.

  Here is what Rep. Frank, who is the chairman of the House Financial Services Committee, said yesterday:

"When I first heard it, I thought it was a joke," he said. "More consumer powers have resided in the Fed for some time than in any other agency, and they haven’t done it well."

  Though I have been concerned that parts of the House financial reform legislation itself was watered down in the face of furious lobbying by Wall Street, at least the House bill does call for an independent Consumer Financial Protection Agency. That is the proposal that I support and that is what the people of the country deserve.

  We have not lost this battle--yet. There is significant opposition to an emerging bi-partisan Senate compromise.

"Monetary policy is in the penthouse of the Fed, ‘safety and soundness’ are on the upper floors, and consumer protection has been stashed in the basement," said Senator Jeff Merkley, Democrat of Oregon. To accept the new proposal, he said, "I’d have to be convinced that the culture of the Fed has gone through some radical change."[emphasis added]

  And outside the Senate, this important point from John Taylor, president and chief executive of the National Community Reinvestment Coalition:

"The Fed has repeatedly shown a lack of desire to enforce the laws that are already on its books," Mr. Taylor said. Asked where he would want to house the new consumer agency, if not at the Fed, he replied: "I’d take the National Zoo over these guys. This is a place to bury it, or at least to make it ineffective."

Travis B. Plunkett, legislative director for the Consumer Federation of America, noted that the Fed acted only after a crisis emerged to rein in subprime mortgage lenders, though it had had that authority since 1994.[emphasis added]

  We need to generate very strong opposition to the Senate Banking Committee's apparent "compromise". Putting consumer protection in the hands of the Fed, as Barney Frank says, is a joke. It is almost guaranteeing future financial misconduct on the part of the interests that have drained millions of Americans of their life savings and economic security.

  ACTION:

  Call Chris Dodd (202-224-2823) and tell him that you oppose giving the Fed a power that it will not use for the benefit of the people.

  Call Barney Frank (202-225-5931) and urge him to stand strong for an independent Consumer Financial Protection Agency.

  Thanks for your activism!

Yesterday, I raised my concerns about the Senate's proposal to hand more power to the Federal Reserve Board and give the Fed the role of protecting consumers. Honestly, I thought it was a cruel joke and a perfect example of the Washington insiders protecting the interests of Wall Street. Barney Frank agrees.

  Here is what Rep. Frank, who is the chairman of the House Financial Services Committee, said yesterday:

"When I first heard it, I thought it was a joke," he said. "More consumer powers have resided in the Fed for some time than in any other agency, and they haven’t done it well."

  Though I have been concerned that parts of the House financial reform legislation itself was watered down in the face of furious lobbying by Wall Street, at least the House bill does call for an independent Consumer Financial Protection Agency. That is the proposal that I support and that is what the people of the country deserve.

  We have not lost this battle--yet. There is significant opposition to an emerging bi-partisan Senate compromise.

"Monetary policy is in the penthouse of the Fed, ‘safety and soundness’ are on the upper floors, and consumer protection has been stashed in the basement," said Senator Jeff Merkley, Democrat of Oregon. To accept the new proposal, he said, "I’d have to be convinced that the culture of the Fed has gone through some radical change."[emphasis added]

  And outside the Senate, this important point from John Taylor, president and chief executive of the National Community Reinvestment Coalition:

"The Fed has repeatedly shown a lack of desire to enforce the laws that are already on its books," Mr. Taylor said. Asked where he would want to house the new consumer agency, if not at the Fed, he replied: "I’d take the National Zoo over these guys. This is a place to bury it, or at least to make it ineffective."

Travis B. Plunkett, legislative director for the Consumer Federation of America, noted that the Fed acted only after a crisis emerged to rein in subprime mortgage lenders, though it had had that authority since 1994.[emphasis added]

  We need to generate very strong opposition to the Senate Banking Committee's apparent "compromise". Putting consumer protection in the hands of the Fed, as Barney Frank says, is a joke. It is almost guaranteeing future financial misconduct on the part of the interests that have drained millions of Americans of their life savings and economic security.

  ACTION:

  Call Chris Dodd (202-224-2823) and tell him that you oppose giving the Fed a power that it will not use for the benefit of the people.

  Call Barney Frank (202-225-5931) and urge him to stand strong for an independent Consumer Financial Protection Agency.

  Thanks for your activism!

   It is hard to overstate how out-of-touch the insiders in Washington are--and how much they are far more attuned to the demands of Wall Street and the financial powers-that-be. You can't find a better example than the apparent bi-partisan deal to give the Federal Reserve Board more power--and, most astonishingly, the power to protect consumers.

  Here is how the insiders are almost guaranteeing another financial calamity for the people:

In an effort to secure Republican support for an overhaul of financial regulations, the chairman of the Senate Banking Committee on Monday proposed giving the Federal Reserve responsibility for protecting consumers from abusive and deceptive financial products.

  Let's review the record. The Federal Reserve Board, under the leadership of Alan Greenspan, and with the nodding approval of the Fed's governing board--including, at the time, the head of the New York Fed, Tim Geithner--sat back, allowed and encouraged the real estate and asset bubble to grow. We know the outcome: a financial system in tatters and, more important, millions of people thrown out on the street--either because they lost their jobs or because they couldn't pay their mortgages or fees for retirement homes after the values of home equity and IRAs evaporated.

  A lot of this happened because of greed. But, most of what happened occurred because the Fed and the financial community breathe the same air--they accept the same ideology and reinforce the same group-think that led us into the mess we find ourselves.

  It isn't just a group-think that set the stage for the more recent asset bubble. It's a group-think that valued, for thirty years, the importance of the so-called "free market" over the livelihoods of millions of Americans. A point I have made before is the failure of the Fed to fulfill its legally-mandated goal of full employment, along with price stability. Can anyone cite an instance, in the past 10 years (and I'd say you could go back 20 years) where a Fed chairman uttered the phrase "full employment" in a statement about its long-term goals? And the insiders in Congress (many of whom are awash in corporate, Wall Street money) have utterly failed to demand that the Fed pursue the goal of full employment.

  And, so, now Chris Dodd wants to hand the power to protect consumers to the very institution that does not, and cannot, think first about consumers. You can't make this up.

  I continue to support the Administration's proposal to create an independent Consumer Financial Protection Agency. If the Congress fails to do so, the president should veto any bill emerging from Congress that pretends to be about financial reform yet hands more power to the very institutions that cannot bring about real change.

   It is hard to overstate how out-of-touch the insiders in Washington are--and how much they are far more attuned to the demands of Wall Street and the financial powers-that-be. You can't find a better example than the apparent bi-partisan deal to give the Federal Reserve Board more power--and, most astonishingly, the power to protect consumers.

  Here is how the insiders are almost guaranteeing another financial calamity for the people:

In an effort to secure Republican support for an overhaul of financial regulations, the chairman of the Senate Banking Committee on Monday proposed giving the Federal Reserve responsibility for protecting consumers from abusive and deceptive financial products.

  Let's review the record. The Federal Reserve Board, under the leadership of Alan Greenspan, and with the nodding approval of the Fed's governing board--including, at the time, the head of the New York Fed, Tim Geithner--sat back, allowed and encouraged the real estate and asset bubble to grow. We know the outcome: a financial system in tatters and, more important, millions of people thrown out on the street--either because they lost their jobs or because they couldn't pay their mortgages or fees for retirement homes after the values of home equity and IRAs evaporated.

  A lot of this happened because of greed. But, most of what happened occurred because the Fed and the financial community breathe the same air--they accept the same ideology and reinforce the same group-think that led us into the mess we find ourselves.

  It isn't just a group-think that set the stage for the more recent asset bubble. It's a group-think that valued, for thirty years, the importance of the so-called "free market" over the livelihoods of millions of Americans. A point I have made before is the failure of the Fed to fulfill its legally-mandated goal of full employment, along with price stability. Can anyone cite an instance, in the past 10 years (and I'd say you could go back 20 years) where a Fed chairman uttered the phrase "full employment" in a statement about its long-term goals? And the insiders in Congress (many of whom are awash in corporate, Wall Street money) have utterly failed to demand that the Fed pursue the goal of full employment.

  And, so, now Chris Dodd wants to hand the power to protect consumers to the very institution that does not, and cannot, think first about consumers. You can't make this up.

  I continue to support the Administration's proposal to create an independent Consumer Financial Protection Agency. If the Congress fails to do so, the president should veto any bill emerging from Congress that pretends to be about financial reform yet hands more power to the very institutions that cannot bring about real change.

   Yours truly is the new owner of an IPhone but this is not a discussion of the pros and cons of the device (the jury is still out). But, the cool company has got some issues about the treatment of its workers:

The Cupertino, Calif., company, in a report posted to its Web site, said three facilities had hired a total of 11 employees prior to reaching the legal working age in those countries. Some of the workers were as young as 15 years old, Apple said. At the time of the audit, the workers were either no longer underage or employed by the contractors. Apple didn't name the suppliers or identify in which countries the infractions of its policies occurred.

The document summarizes the results of on-site audits of 102 facilities and says roughly 133,000 workers, supervisors and managers have been trained as part of its program. This is the fourth year Apple has audited the work practices of its suppliers, a practice that started in 2006 after reports of worker abuses at Hon Hai Precision Industry Co.'s Foxconn, a Chinese manufacturer that assembled iPods for Apple.

   One can theorize that the unnamed countries are in Asia where underage employment is pretty typical. The fact that Apple disclosed the issues on its website says something about the increased scrutiny forced on companies by independent groups. That said, I think we have to take with a grain of salt the monitoring that goes on--it is inconceivable that the auditing catches anything but a small fraction of the abuses. We can't even effectively and comprehensively track and enforce workplace safety in this country.

   The underlying issue is not auditing and enforcement. It is that we have an economic system, here and around the world, that encourages substandard wages and abusive working conditions. Until we change that, we won't stop the abuses.

   Yours truly is the new owner of an IPhone but this is not a discussion of the pros and cons of the device (the jury is still out). But, the cool company has got some issues about the treatment of its workers:

The Cupertino, Calif., company, in a report posted to its Web site, said three facilities had hired a total of 11 employees prior to reaching the legal working age in those countries. Some of the workers were as young as 15 years old, Apple said. At the time of the audit, the workers were either no longer underage or employed by the contractors. Apple didn't name the suppliers or identify in which countries the infractions of its policies occurred.

The document summarizes the results of on-site audits of 102 facilities and says roughly 133,000 workers, supervisors and managers have been trained as part of its program. This is the fourth year Apple has audited the work practices of its suppliers, a practice that started in 2006 after reports of worker abuses at Hon Hai Precision Industry Co.'s Foxconn, a Chinese manufacturer that assembled iPods for Apple.

   One can theorize that the unnamed countries are in Asia where underage employment is pretty typical. The fact that Apple disclosed the issues on its website says something about the increased scrutiny forced on companies by independent groups. That said, I think we have to take with a grain of salt the monitoring that goes on--it is inconceivable that the auditing catches anything but a small fraction of the abuses. We can't even effectively and comprehensively track and enforce workplace safety in this country.

   The underlying issue is not auditing and enforcement. It is that we have an economic system, here and around the world, that encourages substandard wages and abusive working conditions. Until we change that, we won't stop the abuses.

  It is not easy, under our current "free market" economic rules, to push corporations to do the right thing when the overriding imperative of every CEO is to maximize their own massive pay packages. But, every year, the federal government spends billions of dollars in our tax dollars--our hard-earned money--to buy services. Here is a move by the president to shape policy on behalf of the middle-class, choosing workers over abusive corporate power.

  Let us applaud the Administration for this step:

The Obama administration is planning to use the government’s enormous buying power to prod private companies to improve wages and benefits for millions of workers, according to White House officials and several interest groups briefed on the plan.

   By altering how it awards $500 billion in contracts each year, the government would disqualify more companies with labor, environmental or other violations and give an edge to companies that offer better levels of pay, health coverage, pensions and other benefits, the officials said.

   Because nearly one in four workers is employed by companies that have contracts with the federal government, administration officials see the plan as a way to shape social policy and lift more families into the middle class. It would affect contracts like those awarded to make Army uniforms, clean federal buildings and mow lawns at military bases.

   Although the details are still being worked out, the outline of the plan is drawing fierce opposition from business groups and Republican lawmakers. They see it as a gift to organized labor and say it would drive up costs for the government in the face of a $1.3 trillion budget deficit.[emphasis added]

  This is a place where the president is doing the right thing. There is simply no reason for our money to go to companies who are not willing to pay decent wages and be willing to make sure that American workers have a path to a middle-class livelihood.

  But, as the media report indicates, Republicans and business have no interest in the concept of middle-class jobs. You can bet that, as they did with the health care debate and the financial reform initiatives (in particular, the attempt--apparently now abandoned--to push for the creation of a Consumer Financial Protection Agency to protect the people), the anti-middle-class forces--the Republican Party and the irresponsible elements of the business community will attempt to block the president's initiative.

  We can't let that happen.