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Early Data Suggest More Suicides In 2008; Rise Is Similar To Past Recessions

2009-11-23T03:54:15Z

Early signs suggest the number of suicides in the U.S. crept up during the worst recession in decades, according to a Wall Street Journal survey of states that account for about 40% of the U.S. population.

New AOL Logo: Aol.com (PHOTOS)

2009-11-23T03:49:16Z

AOL is introducing a new logo and "brand identity."

The company's new look, which will be rolled out next month "when it is spun off from Time Warner, ditches the odd-looking triangle that has long served as the brand symbol and replaces the letters AOL with 'Aol.' -- complete with a period."

AOL posted a press release previewing the change on its website on Sunday.

The new AOL brand identity is a simple, confident logotype, revealed by ever-changing images. It's one consistent logo with countless ways to reveal. The new brand identity will be fully unveiled on December 10, when AOL common stock begins trading on the New York Stock Exchange.

"Our new identity is uniquely dynamic. Our business is focused on creating world-class experiences for consumers and AOL is centered on creative and talented people - employees, partners, and advertisers. We have a clear strategy that we are passionate about and we plan on standing behind the AOL brand as we take the company into the next decade," said Tim Armstrong, Chairman and Chief Executive Officer of AOL.

The New York Times quotes Sam Wilson, part of the team at Wolff Olins who designed the new look:

The period in the logo was added to suggest "confidence, completeness," Ms. Wilson said, by declaring that "AOL is the place to go for the best content online, period."

Mr. Armstrong said he liked to describe the period as "the AOL dot" because "the dot is the pivot point for what comes after AOL," whether it is e-mail, Web sites or coming offerings that will "surprise people."

Microsoft, News Corp Have Talked About De-Indexing From Google

2009-11-23T00:36:55Z

Microsoft has had discussions with News Corp over a plan that would involve the media company's being paid to "de-index" its news websites from Google, setting the scene for a search engine battle that could offer a ray of light to the newspaper industry.

QVC Black Friday DEALS: Full Details

2009-11-22T21:31:29Z

NEW YORK — Television retailer QVC has made aggressive plans to keep shoppers watching – instead of mall-hopping – on Black Friday, an event it has traditionally ignored.

The leading network for TV shoppers promises special deals and a healthy dose of new items for sale starting on Thanksgiving night. Program host Dave James plans to stay awake for 28 hours of telethon-like coverage.

The day after Thanksgiving is traditionally the biggest shopping day of the year, called "Black Friday" because it's key for many businesses to go in the black, or turn a profit. QVC, which competes with ShopNBC and the HSN home shopping network, has not wanted to get caught up in the frenzy and has always treated it as just another day for its sales pitches, said Doug Rose, the network's vice president of programming and marketing.

"This year, and we've been planning on this for many months, we really expect to join the fray with the other retailers," Rose said.

QVC is hoping for a "Black Friday" of its own. Hurt by the same recession that affected other retailers last year, QVC's fourth quarter revenue in 2008 was down 8 percent from the previous year. So far this year revenue has been essentially flat, although the value of the items that QVC is selling is down slightly.

The network generally offers one "special value" item to customers each day. For "Black Friday" coverage, which starts at 8 p.m. EST on Thanksgiving, there will be three.

Every hour, there will be a specially priced offer, and there will be five hours of gifts that have never been available before on the network, QVC said.

"There are a lot of people who think of going to the mall on `Black Friday' as dental surgery – painful and awful," Rose said. "We'll be a good alternative."

James, a former radio disc jockey, said the closest thing he's come to his upcoming 28-hour marathon is hosting radiothons for about half the time. He said he's working with a nutritionist to prepare him for the ordeal.

He's convinced his family to have an early Thanksgiving dinner and hopes the turkey will let him have a long nap before he goes to QVC's Pennsylvania studio.

"There's going to be coffee – a lot of coffee," he said.

___

On the Net:

http://www.qvc.com

Housing Crisis Broadening: Even Renters Are Not Safe From Foreclosures

2009-11-22T19:09:31Z

A new wave of foreclosures stands to hurt people who may have never taken out a mortgage: renters.

Sherrod Brown: Obama Focused On Main Street, But Not All His Advisers Are

2009-11-22T14:46:00Z

Despite carving out a niche for himself as a leading progressive voice in Congress, Senator Sherrod Brown (D-Ohio) rarely goes in for headline-grabbing proclamations or sharp political rhetoric.

So on Sunday, when Brown stated his concern that some of the president's economic consultants were too focused on Wall Street at the cost of small business, it hardly seemed like some flippant remark.

"I think the president is [focused on Main Street]," Brown told CNN's "State of the Union." "I think the vice president is. I think the advisers are mixed."

The Ohio Democrat was responding to a handful of House members -- Democrats and Republicans alike -- who this past week had criticized Timothy Geithner for mishandling the bank bailout and failing to spur small business lending. Those members have called for the Treasury Secretary's resignation in light of these perceived failures.

Brown, by contrast, took the time on Sunday to offer encouragement to Geithner for finally turning his attention to these issues.

"I was with Secretary Geithner at the Treasury Department this week [for] a small business summit: Senator [Mark] Warner and I with a bunch of small business people, Karen Mills -- the administrator of SBA -- and Secretary Geithner. And I took him aside and said we need more focus on manufacturing, we need an industrial policy. Manufacturing creates middle class jobs and there has not been a manufacturing policy in this country for forever, really. Former presidents haven't had it. President Obama is moving in that direction. I think they've turned a corner. I think particularly next year, the focus is all about creating jobs. And I think we will begin to see changes."

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Analysis: Fed Under Fire As Public Anger Mounts

2009-11-22T14:17:17Z

WASHINGTON — Suddenly the Federal Reserve is everybody's punching bag.

Strip the Fed of its bank regulation powers, some in Congress are demanding. Get probing audits of its behind-the-scenes operations, others say.

The chairman of the Federal Reserve Board is always fair game for criticism and second-guessing, usually over interest rate actions. But this year the criticism is much broader as Congress responds to widespread public anger that the Fed bailed out Wall Street but not ordinary Americans, and with unemployment in double digits.

Former Fed Chairman William McChesney Martin Jr. famously said that the central bank's job was to yank away the punchbowl just when everybody is starting to party. And while Fed Chairman Ben Bernanke has signaled the Fed will keep interest rates low for now, a round of higher rates inevitably will come.

The Fed finds itself both the punchbowl keeper and the punching bag. Imagine the outcry when it does begin to crank up rates – perhaps just ahead of next year's midterm elections.

Fireworks seem likely at Senate confirmation hearings early next month on President Barack Obama's nomination of Bernanke to a second four-year term as chairman.

Many economists and Fed watchers say congressional efforts to rein in the Fed's powers could interfere with the central bank's ability to help guide the fragile economy to recovery.

The Fed's very independence and its unique ability among U.S. institutions to create money out of thin air enabled it to act quickly to stabilize the nation's financial system after it froze up last September after the bankruptcy of the Lehman Brothers investment house, Fed backers say.

"It might have been the Fed's finest moment when it had to jump into the market," said David M. Jones, a former Fed economist and president of DMJ Advisors, a Denver-based consulting firm. "We still have to wait to see how effective the Fed is in its exit strategy and whether it can keep inflation in check. But this badgering by Congress, even if there is populist sentiment, is inappropriate."

The Fed's aggressive intervention also set the stage for the current criticism. Many lawmakers question whether the Fed's money machine has mainly benefited financial markets and not the broader economy. Lawmakers are also peeved that the central bank acted without congressional involvement when it brokered the 2008 sale of failed investment bank Bear Stearns and engineered the rescue of insurer American International Group.

Bernanke, first appointed by President George W. Bush, has worked closely with both Treasury Secretary Timothy Geithner and Bush Treasury Secretary Henry Paulson in confronting the worst financial crisis in decades. Geithner also has gotten his share of congressional wrath, mainly for his administering of the $700 billion bank bailout fund.

"In the past, the Federal Reserve was held in very high esteem," said Rep. Ron Paul, R-Texas, a libertarian who twice ran quixotic presidential campaigns and remains a darling of skeptics of Washington. Now, it's "the source of our problem," suggests Paul, author of the best-seller "End the Fed."

Usually an outlier, Paul suddenly has found an army of at least 307 House colleagues and 30 senators marching behind his legislation to subject the Fed to intense scrutiny by Congress' Government Accountability Office. The House Financial Services Committee endorsed Paul's approach 43-26 last week over objections from its chairman, Rep. Barney Frank, D-Mass.

The bill would authorize Congress to audit not only the Fed's lending programs but its basic decisions to set monetary policy by raising or lowering interest rates. Paul has been introducing a version every year since the early 1980s, but this is the first time it has garnered any serious attention.

Senate Banking Committee Chairman Chris Dodd, D-Conn., who will preside over Bernanke's confirmation hearings, has proposed legislation that would strip the Fed of its bank-regulation authority and give the Senate a role in selecting the 12 regional Federal Reserve bank presidents.

Dodd says his measure would return the Fed to its core mission of setting monetary policy, claiming it proved itself "an abysmal failure" by not cracking down on risky lending practices that led to the financial meltdown.

Dodd is in an extremely tight battle for re-election, even though he has served in Congress for 35 years.

"I don't think it ever hurts to have a member of Congress stand up and denounce the Fed. There is a lot of anger out there, and this is basically a therapeutic gesture," said Ross Baker, a political scientist at Rutgers University.

Still, Baker said, it probably isn't wise to tamper with the formula that makes the Fed "very much an anomaly in American government. It's independent, it has to be. You don't want the Fed to be under the control of the president. And it kind of sits out there – not in the executive branch, not in the legislative branch, not in the judicial branch. Sort of its own little element in the separation-of-powers constellation."

While the Fed is subject to some congressional oversight, its decisions don't have to be ratified by the president or Congress. Fed officials are not paid with money appropriated by Congress.

Should Bernanke be worried?

"Not only should be worried, he's clearly ratcheted up his game in terms of his communications with Congress," said Norman Ornstein, a senior fellow at the American Enterprise Institute.

Ornstein said the Fed bashing this time is different from before, with "a broader base of support. And it's coming from people who in the past would not have hit the Fed. There's a lot of populist anger out there – on the left, in the center and on the right. And politicians are responsive to that."

___

EDITOR'S NOTE: Tom Raum covers economics and politics for The Associated Press.

(This version CORRECTS to show that Ron Paul twice ran for president, as Libertarian Party candidate in 1988 and in 2008 as a Republican seeking the party nomination.)

Revisiting The Fed's Bailout Of AIG And The Benefits For Goldman Sachs

2009-11-22T07:12:22Z

A RAY of sunlight broke through the Washington fog last week when Neil M. Barofsky, special inspector general for the Troubled Asset Relief Program, published his office's report on the government bailout last year of the American International Group.

New Poll Measures The Hardship Of Layoffs: 52% Were Surprised By Job Loss

2009-11-22T06:36:26Z

When the pink slip comes, trouble follows -- financial, but emotional as well.

Three in 10 Americans in the latest ABC News/Washington Post poll say they or someone in their household has lost a job in the past year -- a new high. And the impacts can be devastating: Beyond financial hardship, large numbers report anger, stress and depression as a result.

Tom Friedman Explains Causes Of America's 'Sub-Optimal Solutions' (VIDEO)

2009-11-22T05:22:12Z

New York Times columnist Thomas L. Friedman is worried that America is producing "sub-optimal solutions" to big problems like global warming, an education system in decline and a weak economy.

The author of Hot, Flat, and Crowded appeared on The Charlie Rose Show on Friday night to discuss President Obama's recent trip to Asia, and more specifically China. Friedman lamented the failure of US governance and the "forces of paralysis" that surround President Obama. He is worried that China's streamlined, one-party system will be in a better place to implement solutions to large global problems more quickly than the US.

Holding us back, Friedman argues, is a political system too closely connected with money and well-funded interests. Gerrymandering on the part of politicians makes it so that our leaders practically pick us, not the other way around. Friedman also thinks cable news television distorts the truth and that the internet (at its worst) can be a terrible thing for our nation's politics. He also says American businesses have gone AWOL, and hover over America, participating only when it suits their industry's needs.

Friedman says that better citizens--not politicians--can solve our nation's problems.

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EPA: Uranium From Polluted British Petroleum Mine Found In Nevada Water Wells

2009-11-21T22:04:41Z

YERINGTON, Nev. — Peggy Pauly lives in a robin-egg blue, two-story house not far from acres of onion fields that make the northern Nevada air smell sweet at harvest time.

But she can look through the window from her kitchen table, just past her backyard with its swingset and pet llama, and see an ominous sign on a neighboring fence: "Danger: Uranium Mine."

For almost a decade, people who make their homes in this rural community in the Mason Valley 65 miles southeast of Reno have blamed that enormous abandoned mine for the high levels of uranium in their water wells.

They say they have been met by a stone wall from state regulators, local politicians and the huge oil company that inherited the toxic site – BP PLC. Those interests have insisted uranium naturally occurs in the region's soil and there's no way to prove that a half-century of processing metals at the former Anaconda pit mine is responsible for the contamination.

That has changed. A new wave of testing by the U.S. Environmental Protection Agency has found that 79 percent of the wells tested north of the World War II-era copper mine have dangerous levels of uranium or arsenic or both that make the water unsafe to drink.

And, more importantly to the neighbors, that the source of the pollution is a groundwater plume that has slowly migrated from the 6-square-mile mine site.

The new samples likely never would have been taken if not for a whistleblower, a preacher's wife, a tribal consultant and some stubborn government scientists who finally helped crack the toxic mystery that has plagued this rural mining and farming community for decades.

"They have completely ruined the groundwater out here," said Pauly, the wife of a local pastor and mother of two girls who organized a community action group five years to seek the truth about the pollution.

"It almost sounds like we are happy the contamination has moved off the site," she said. "But what we are happy about is ... they have enough data to now answer our questions."

"Prior to this, we didn't really have an understanding of where water was moving," said Steve Acree, a highly regarded hydrogeologist for the EPA in Oklahoma, who was brought in to examine the test results. "My interpretation at this stage of the process is yes, you now have evidence of mine-impacted groundwater."

The tests found levels of uranium more than 10 times the legal drinking water standard in one monitoring well a half mile north of the mine. Though the health effects of specific levels are not well understood, the EPA says long-term exposure to high levels of uranium in drinking water may cause cancer and damage kidneys.

At the mine itself, wells tested as high as 3.4 milligrams per liter – more than 100 times the standard. That's in an area where ore was processed with sulfuric acid and other toxic chemicals in unlined ponds.

Moving north toward the mine's boundary and beyond, readings begin to decline but several wells still tested two to three times above health limits.

"The hot spots, the treatment areas on the site, are places you totally expect to see readings like that," said Dietrick McGinnis, an environmental consultant for the neighboring Yerington Paiute Tribe. "But this shows you have a continuous plume with decreasing concentration as you move away from the site."

The new findings are no surprise to Earle Dixon, the site's former project manager for the U.S. Bureau of Land Management, which owns about half of the property.

An administrative judge ruled last year that the BLM illegally fired Dixon in 2004 in retaliation for speaking out about the health and safety dangers at the mine.

"The new data depicts the story that I had tried to hypothesize as a possibility," Dixon told the AP.

"It was speculation, because I didn't have the dramatic evidence they have now. You just had all the symptoms," he said from New Mexico, where he is now a state geologist.

"The way the state has been telling the story and BP and Lyon County ... is this is mostly all natural. Well, no it's not," he said. "We now know for a fact that most of this uranium as far as 2 miles out from the mine comes from the mine.

"This site becomes a poster child for mining pollution."

Officials for BP, formerly known as British Petroleum, and its subsidiary Atlantic Richfield have insisted until now that the uranium could not be tied to the mine. They maintained the high concentrations were due to a naturally occurring phenomenon beneath Nevada's mineral-laden mountains.

The new discovery has Pauly, McGinnis and others renewing a call for the EPA to declare the mine a Superfund site – something the state and county have opposed despite a new potential source of money to help cover cleanup costs that could reach hundreds of millions of dollars.

Jill Lufrano, spokeswoman for the Nevada Department of Environmental Protection, said an investigation into the source of contamination is continuing but "the new finding does put scientific confirmation behind the theory that this would migrate off site."

She said the new evidence doesn't change the state's opposition to Superfund listing. Nevada has a long tradition of supporting mining and now produces more gold than anywhere in the world except China, South Africa and Australia.

Copper first was discovered around Yerington in 1865. Anaconda bought the property in 1941 and – fueled by demand after World War II – produced nearly 1.75 billion pounds of copper from 1952-78.

A mineral firm launched a then-secret plan to produce yellowcake uranium from the mine's waste piles in the 1970s. An engineer reported in 1976 that they weren't finding as much uranium as anticipated in the processing ponds. "Where could it be now?" he wrote. "Should we continue to look for it?"

Had they continued the search outside the processing area, Wyoming Mineral Corp. likely would have detected the movement of the contamination. But the market for uranium dipped and the company scuttled the venture.

Pauly never suspected the mine was leaking contamination when she and her husband finished building their home in 1990. They drank water from their well until 2003 – and used it to mix formula for a baby from 1996-98 – before becoming suspicious as rumors swirled about the contaminated mine.

"Everybody said it was fine," she said. "Legally they didn't have to disclose anything because technically there was nothing definitive then that showed the contamination was moving off the site."

BP and Atlantic Richfield, which bought Anaconda Copper Co. in 1978, have stopped claiming there is no evidence the mine caused any contamination, but they aren't conceding anything about how much.

"We know the mine has had an impact but to what extent is not really known at this time," Tom Mueller, spokesman for BP America in Houston, told The Associated Press in a recent e-mail. He said the sampling "remains inconclusive regarding relative impacts from the mine" compared with other potential sources.

Yerington Paiute Tribe Chairman Elwood Emm said he hopes the new findings help expedite cleanup. "In the meantime, we continue to lose our water resource," he said.

So who will pay for the cleanup?

"That is the million-dollar question," Dixon said. "Every Superfund site needs an advocate or two or three and in my view there are none for Yerington except for Peggy Pauly."

Regardless of who pays, Acree said, it likely will take decades to clean up.

(This version CORRECTS SUBS 4th graf to correct to BP PLC, sted British Petroleum. Minor EDITS.)

New Consensus Sees Stimulus Package As Worthy Step: NYT

2009-11-21T04:30:10Z

Now that unemployment has topped 10 percent, some liberal-leaning economists see confirmation of their warnings that the $787 billion stimulus package President Obama signed into law last February was way too small. The economy needs a second big infusion, they say.

Senator Says Loophole In Derivatives Regulation Undermines Reform

2009-11-21T00:23:04Z

The effort to impose new restrictions on the financial system falls short of true reform if there's a gigantic loophole for foreign exchange derivatives, Sen. Maria Cantwell (D-Wash.) said Thursday.

"Most people who write about the 'comprehensive reform' -- they're missing the point, which is, you've got to have derivatives regulation," she said in an interview with the Huffington Post.

And indeed, bills being considered in Congress would bring transparency and accountability to the complex and opaque derivatives contracts that nearly brought down the financial markets last year -- by forcing them to be traded through clearing houses or on exchanges.

But the bills, based on a proposal put forth by the Obama administration, would exempt foreign exchange derivatives from disclosure requirements.

That loophole is now facing opposition in both houses of Congress.

As Cantwell explains it: "The whole foreign issue is a scapegoat. The real issue is that if you have a loophole that people can drive their tractor through, drive their volume through, you create a dark market."

This one loophole could be widely exploited, Cantwell argued, and "You can't have exemptions that are 50-80 percent of the market or it won't be reform."

Foreign exchange derivatives -- private contracts to buy or sell currencies in the future -currently make up about eight percent of the largely opaque derivatives market. U.S. firms with extensive operations overseas like Nike and Apple use them as insurance against currency fluctuations.

Virtually the entire market is traded in the shadows by the biggest banks.

Wall Street wants to keep it that way. Banks made more than $18 billion off foreign exchange derivatives in 2007 and 2008, according to a report by national bank regulator the Office of the Comptroller of the Currency. By comparison, these same banks lost about $13.7 billion during the same period from all other types of derivatives trades.

Supporters of the exemption argue that the system is working fine, and that any attempts to regulate it will simply drive the market overseas into much more opaque places, beyond the reach of meaningful regulation.

Cantwell's response to that concern: "The international community is waiting for the United States to stand up and have transparent markets before they themselves have transparent markets. Se we ought to be the beacon for how it's done, not sit around and blame foreign countries that might have dark markets."

The two leaders responsible for shepherding derivatives reform legislation through the chamber -- Financial Services Committee Chairman Barney Frank (D-Mass.) and Agriculture Committee Chairman Collin Peterson (D-Minn.) -- have committed to closing the foreign exchange loophole, the Huffington Post reported earlier this week.

In the Senate, the bill introduced by Banking Committee Chairman Christopher Dodd (D-Conn.) includes the loophole. However, since the Senate Agriculture Committee also has jurisdiction over how derivatives will be regulated (American farmers have been using derivatives for more than 100 years) it's unclear what will ultimately emerge from the Senate.

"This is a long battle," Cantwell said. "It's like a porous border. We've got to make sure we really are closing those loopholes."

Tina Fey Does Sarah Palin At Ad Council Dinner (VIDEO)

2009-11-20T22:39:12Z

While hosting the Ad Council Annual Dinner Wednesday night, "30 Rock" creator Tina Fey brought back her famous impersonation of former Alaska Governor Sarah Palin.

"Mrs. Palin and I continue to have so much in common," she said. "They recently made a porn movie about Sarah and then this same porn actress, Lisa Ann, played me in a parody of '30 Rock' ... And weirdly of the three of us, Lisa Ann knows the most about foreign policy."

"I feel like Sarah Palin right now," she said later, gesturing at her teleprompters. "It's not that hard." She went into her Palin voice, saying, "We'll begin with an issue that's so critical to the future opportunity ..." When the audience laughed, she added, "I'm gonna be doing that 'till I'm dead."

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Rep. Jackie Speier's Tough Bank Amendment Passes With Room Nearly Empty

2009-11-20T22:34:38Z

Don't sleep on Jackie Speier. The freshman Democrat from California came into the House Financial Services Committee room Thursday ready to fight for her long-shot amendment to limit the leverage ratio for big banks.

"I expected a roll call vote," said Speier, fresh off a star turn on the Colbert Report.

Lobbyists and committee staffers expected that the amendment -- which would mandate that banks essentially could not lend out or invest more than 12 dollars for every dollar they keep in reserve -- would only get a roll call and that it'd be soundly defeated, bounced by a coalition of Republicans and bank-friendly Democrats, who call themselves "New Democrats."

Instead, there were barely any lawmakers in their seats when her amendment came up during an all-day debate on comprehensive financial regulatory reform.

One of the two or three Republicans in the room asked for a roll call, but then quickly reconsidered and withdrew the request.

It passed by a unanimous voice vote.

The amendment makes sense, but rationality alone is rarely enough to get legislation through committee. The banks long fought to eliminate the cap and finally succeeded in 2004, a victory that is partially to blame for the financial crisis as over-leveraged banks ran short on capital.

But when the vote was called Thursday, the GOP members present didn't want to put their names to that agenda.

"I was thrilled," said Speier, who wouldn't confess to being surprised that she won. She guessed, instead, that the initial objection was simply Pavlovian.

"There's a knee-jerk reaction to just oppose everything on the other side," she told HuffPost. "I think what my Republican friends realized was that after going through this financial nightmare, to somehow argue against putting a leverage cap when we know that what happened was many of these companies -- the Bear Sterns, the Merrills, the Lehmans, were all leveraged 30-1 -- if we really are going to be real about tamping down that kind of behavior in the future, coming up with a reasonable leverage cap makes sense."

It wouldn't be a novel idea. Until 2004, the Securities and Exchange Commission limited leverage ratios to 12 to one. Speier's cap would only re-apply a cap to financial institutions deemed to be a risk to the overall financial system.

Final victory in the committee, however, still awaits. Just before a final vote was called, a bloc of Democrats from the Congressional Black Caucus demanded the vote be put off, sending a message to the White House that more needs to be done to improve the job situation.

The New York Times, in the fall of 2008, reported that on April 28, 2004, five members of the Securities and Exchange Commission met in a basement hearing room to hear "an urgent plea by the big investment banks."

They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.

The five investment banks led the charge, including Goldman Sachs, which was headed by Henry M. Paulson Jr. Two years later, he left to become Treasury secretary.

A lone dissenter -- a software consultant and expert on risk management -- weighed in from Indiana with a two-page letter to warn the commission that the move was a grave mistake. He never heard back from Washington.

One commissioner, Harvey J. Goldschmid, questioned the staff about the consequences of the proposed exemption. It would only be available for the largest firms, he was reassuringly told -- those with assets greater than $5 billion.

"We've said these are the big guys," Mr. Goldschmid said, provoking nervous laughter, "but that means if anything goes wrong, it's going to be an awfully big mess."

It was. "There's a pattern here," says Speier. "We put these good laws in place, whether it's Glass-Steagall or, in that case the SEC cap. But then the industry comes to us and says, 'Oh, this is cramping our style. We could make' -- of course they don't say it this way -- 'we could make so much more money if you just lifted this cap.' And they were right. They made a lot of money and they also brought the entire country to its knees."

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