Opening Night in Chicago: Senator Durbin Denounces Unfairness; Calls for Reform
"There were times when I thought I couldn't last for long
But now I think I'm able to carry on
It's been a long, been a long time coming
But I know a change is gonna come, oh yes it will"
-Sam Cooke: A Change is Gonna Come
Opening night at the Showdown in Chicago. Senator Durbin from Illinois gave a rousing speech about unfairness, bailouts, credit care usury and bonus audacity. He emphasized the need to be respectful but unyielding in our demands for balanced reform. He spoke of how each marcher is there and represents the pain and hopes of individuals who were abused by foreclosure, subprime treachery and more. The only surprising element was the muted applause in Chicago for the president of the United States. Only on the third time that Durbin referenced the name Obama to arouse the crowd did he get the applause he was looking for.
Sheila Bair, FDIC chairperson, will address the crowd tomorrow. That is great to see. After watching the great episode on PBS Frontline entitled "The Warning" about OTC derivatives, I am beginning to wonder if the essential reform we should be seeking is to have only women regulate finance. Imagine if Janet Yellin had run the Fed, Elizabeth Warren ran the CFPA, Sheila Bair stayed in place at the FDIC and Brookley Born had stayed to run the CFTC. (Though Gary Gensler is doing great work at the CFTC now) They are all highly competent and god knows we would be better off. Every one of these people is first rate competent and does not seem to be missing the capacity of judgment that so many of the men have lacked in the last 20 years.
The question most asked here is "how long can this go on? Bailouts for the ones who created the mess, bankers acting like they earned it, foreclosures and bankruptcies and unemployment rising, and the Congressional Committees pretending to reform the financial regulatory system while they load up on money from the financial lobbyists.
My answer is that no one knows how long. We know that it will change. We will not see a nation that lives on 30 percent credit card rates. We will not see Wall Street wages forever at a 40 percent premium to wages throughout the economy adjusted for skill and experience. We will not pretend that only financial repackagers work hard and are deserving.
The question is when and how, not if, it will change. What hangs in the balance is how much blood will be spilt, disruption needs to occur, homes will be lost, jobs will be lost and municipal functions will be closed down before our political system becomes responsive. We are seeing an ugly chapter in our country, one that Herman Melville in his poem Clarel foresaw as a dark age of democracy. As one of our great theologians once exclaimed,
But today, because we have so cruelly separated freedom from virtue, because we define freedom in a morally inferior way, our country is stalled in what Herman Melville call the "Dark Ages of Democracy," a time when as he predicted, the New Jerusalem would turn into Babylon, and Americans would feel "the arrest of hope's advance." (William Sloane Coffin)
I am grateful that the Showdown in Chicago is happening. What I wish is that professional financiers and economists would join Dean Baker, Bob Kuttner and myself here. This is not left and right, this is right and wrong. Financiers and economists can all see that something is terribly wrong with the financial system. We have embarked on an era of Wall Street Protectionism. Government cronyism conferring gifts upon the Too Big to Fail. While they are not in Chicago the voices of Paul Volcker, George Soros, Mervyn King, and even Alan Greenspan are speaking out. I am grateful for their efforts and courage. Others with financial experience and expertise can see that the market system is being abused. It is time to give up on rational apathy, as Mancur Olson called it in Logic of Collective Action and contribute to the solution.
A series of demands need to be formulated as the pressure rises.
My first cut would look like this:
Bailouts and TBTF
You get bailed out and the public dilutes your equity and top management compensation evaporates. Letters of resignation are given to the authorities. No negotiated terms. Mandatory equity dilution. If you get rescued the public owns some upside. No crony deals between Fed or Treasury officials and management. Anything less is taxpayer abuse.
Foreclosure Modification
Recognize reality. Principal reductions. Burden sharing. 20 percent is less than the costs of foreclosure.
Usury and Credit
As the Industrial Areas Foundation says, 10 percent is enough.
Derivatives Reform
Simple transparent and exchange traded. Regulated capital levels on exchanges.
The efforts that will be required to overcome this Babylon might as well get started here and now. It is my hope that there will be showdowns in Cleveland, Detroit, Miami, Denver, Oakland and more. Things will change. Finance has seen its peak. The question is when and how the change will occur.
This post originally appeared in New Deal 2.0.
Follow Rob Johnson on Twitter: www.twitter.com/rjocean
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Mr. Johnson:
You say:
“….I am beginning to wonder if the essential reform we should be seeking is to have only women regulate finance.”
I say:
Why stop at finance? Women, with their intuitive instincts, emotional IQ and administrative skills need to rule the WORLD!
I kept the e-mail announcing this post in my in-box until I had time to read it. Excellent piece, I’m glad I didn’t miss its wisdom.
I don’t know what it will take for Americans to revolt against the injustices. Somehow the Internet creates an environment where more people are aware of these outrageous abuses, but everyone seems to be waiting for “someone else” to fix things.
I do not consider myself a feminist, but events that might have given rise to a ruling class of women (the Amazons) seem awfully plain from our current level of dysfunction. Trusting male testosterone with civilization sure doesn’t seem to be working out well at all.
Okay, ladies, that's our cue to step up to the plate. Once we're in control, we can finally get birth control covered by insurance companies and stop the mind-numbing number of ED commercials. The number one "hint" the male era of dominance is ending, BTW. (Sorry guys, your secret's out; you did it to yourself - stupidly?)
Where was Durbin when the infamous credit card revision was passed. All for the banks and NOTHING for the people! They talk a good deal but their action speaks louder. The EU wanted a cap on banker's salaries, address the derivatives and hedgefunds and the UK and USA said NO!
So why all this grandstanding after the fact?
"How long can this go on?" As long as the same corrupt politicians who are in the pay of the banks and big business keep getting elected. And remember folks, they didn't elect themselves.
As I follow this debate I am amazed by the stupidity of the american people. We are like kids with a television set: if I don't like it immediately change the channel. When Clinton left the White House, Gore/Bush were arguing how to spend the never ending surpluses. created by the Clinton Administration. After eight years of Bush/Cheney not there were no surpluses left to argue about. We were engaged in two wars; had no idea where Osama bin Ladin was; had lost our standing in the world; and were pushed to the brink of another depression.
So along comes President Obama who tries to get things fixed. And what happens: After 9 months in office the republicans and some independents and democrats expect that he will have solved every problem that took Bush/Cheney eight years to create. Where is the rational in all of this?
I agree we need more regulation of the financial sector, but again Bush/Cheney/McCain/Graham had plenty of time to put this mess together while the great american people slept soundly and enjoyed the phoniness of the Bush years.
We are a stupid electorate who expects everything instantaneously. Let's grow up. Let's make our views known, but let's not think that you can solve eight years of problems in nine months. Just like a child who is raised without love and discipline and ends up committing crimes - you can't make him good again in nine months. It will take time.
Amen ! Fanned !
I remember Obama saying something along the lines of "this is gonna take some time and it's not going to be easy"...something like that.
It's the requirement for instant gratification that has been inculcated in society for at least the past 4 decades. As bellydancer says above, President Obama said this in his acceptance speech: this is for the long haul and everyone has to work together, but it is going to be hard to get people to unlearn a lot of lessons of the recent past. As for the Republicans I don't think they care how long it takes as long as they can block it all.
True enough. But you don't negotiate by giving all your cards away in the first hand. Obama should have called for nationalizing the financial industry, right off the bat. Then reregulation wouldn't sound so bad to the crooks who own Congress, and we might actually get there. As it is now, we're just debating how to rearrange the deck chairs.
Yes, interest rates on credit cards are high -- but no one is forcing anyone to use a credit card to buy something. Don't have the cash -- don't buy it.
I wish our government would adopt the same policy. Washington is acting like a group of college freshmen -- out on their own for the first time without parental supervision -- ordering pizza and beer for the entire dorm (read health care and cap/tax) without a thought to how to pay for it when the bill comes due!
AMEN !!!
I don't have the cash because I'm poor. If I need a $100 heater so I won't freeze this winter, I will charge it. I was granted a credit card with a low limit; yes, the interest is outrageous (30%) but I have no choice. Please stop blaming everyone who needs to use a charge card. In this Depression, there are families using credit cards in order to eat.
Why the surprise about muted applause for Obama? Management 101: you can delegate authority but not responsibility.
It seems to met that no investigation has been undertaken to understand the root cause(s) of the issue(s) we face. Certainly, no investigation into the identity of the culprits who remain unaccountable and at large within the financial community free to perpetrate further damage.
And, therefore,any statements about what might happen would seem to be the worst sort of optimism bias.
Their names are already known: Greenspan, Summers, Rubin, Geithner.
That's just for starters.
http://www.pbs.org/wgbh/pages/frontline/warning/view/
The only way there will be reform on Wall Street is for these people to be perp-walked to Federal District Court, then fitted with orange jumpsuits.
FWIW
The country had to bail out these people and they are still arrogant and self-entitled.
It is my contention that Congress should go back and look at every institution and bank which received TARP, AIG funds, or other bailouts, and go back over the last five years and CLAW BACK all those huge bonuses and money paid to the bankers and others at Goldman, et. al, as they were paid for PHANTOM PROFITS, and FRADULENT. Since all the executives and institutions were using very speculative things which were never worth what they claimed, charge them with RICO AND FRAUD. They could seize the assets, that way, and give them time to make the cases and send a good many of these freaks to jail.
Imagine, having one's assets seized and having to shop at WALMART. The shame of it.
I'll second your motion.
So we've got three points of protest here: credit card rates, wall street wages and an unspecified but definitely 'regulated' level of capital backing derivatives. These three things are being called reform? Credit card rates in particular are only tangentially related to the discussion. Shouldn't that have been brought up when the credit card bill of rights was passed?
How many people even know where the discussion between Barney Frank, Elizabeth Warren, Ben Bernanke and Tim Geithner now stand? It's hard to tell exactly when this country devolved to the point where we're incapable of holding a public conversation. That point is definitely in the past, though.
Greed knows no boundaries, ethics, fairness, morality, or common ground, so you better be ready to fight greed with it's own tactics.
Greed does not compromise.
Greed does not need consensus.
Greed is an end unto itself.
The Greedy Rich own "all" the Politicians, including Durbin, President Obama, and the Police, and the Military.
How do you "really" expect to fight back?
Are you ready to put down the pizza and beer, turn off the HDTV, get off the couch and actually do something, anything, to make change happen?
I doubt it.
This is the land of the obese, the drunks, the drug addicts, the addicted, the birthers, the tea baggers.
http://www.richmonk31.blogspot.com
How is it that the banks, Wall Street and corporate America have convinced our society that only people who need 100's of millions of dollars a year in compensation know how to handle money? Doesn't that sound a little strange? You mean to tell me that someone who could live on 1 or 2 million dollars a year would be undable to steer these companies? You mean to tell me that in spite of living a lavish and spend thrift life style these captians of the universe know the value of a dollar? I would like to see Bank of America put an ad in the paper "CEO wanted, compensation 2 million a year." and see the intelligent, highly educated people line up around the block.
Your proposals seem simple, fair and logical. Unfortunately getting our representatives, with their hand in the pocket of big campaign donors, to act on them is the problem. As you said, the "how" of how we get this done is the problem. It's akin to throwing your car in reverse while speeding down the highway. None of our legislatures have the guts to do it. They're damned if they do, and hope to squeak by if they don't. We can not afford to let them squeak by.
We all agree the banks have ripped us off but they could not have done so without the approval of Congress . The laws protecting the public were systematically abolished by members of Congress and the Presidents of those times signed the executions of the abolishments . Many of the leaders in Congress are leaders because of longevity which means they were part of the gang that abolished the protection laws . If the act of abolishment is wrong now why wasn't it wrong then ? Did they expect the banks to be "COMPASSIONATE" conservatives after what the banks did during the 1980's when the American tax payers were put in a hole for over $400 billion ? If that is the type of people we have as members of Congress "we have a problem" , the banks just sold us another bridge .
The problem with the "Showdown in Chicago" is that the banks that are represented there are not, for the most part, the ones that are responsible for the problems. Specifically, we're looking at representatives from smaller community banks who do not, for example, have credit cards or engage in derivatives trading. The outrage is justifiable, but the target seems to be a bit misplaced.
Where is the manistream media on this story? I have searched every site, not even a mention, could it be because they are all owned by the vested interest who couldnt care less about ordinary people? I wish I lived near enough to join the protest. Great job everyone, lets hope this is the start of a nationwide uprising about the criminals are running the banks and especially the corrupt members of congress. Well done, Senator Durbin for taking a lead and encouraging a popular uprising, at least one politician who is working for the people who elected him!
Dear Unconvinced;
The mainstream media is where you would expect it to be; firmly in the pocket of corporate America. That's why you won't see more than 20 seconds coverage (if that) on the evening news.
A number of weeks back Senator Durbin stood in the well of the Senate and excoriated that body, asserting that the Congress is now owned by the Financial Services (Banking) Industry. To date I have seen nothing that contradicts his assessment.
FWIW
Here's the link:
http://www.realclearpolitics.com/video/2009/05/19/sen_durbin_on_passing_credit_card_legislation.html
FWIW
The problem is all the banks, but most specifically the way banks are regulated and governed and the culture of banking in America. The banking sector is not acting in the best intersts of the American economy or people, and we need to all organize to demand changes in both. Regulation of the banks, the formation of the banks, the size of the banks and more.
Yes this exactly the right place to organize now, people should go to Chicago right now if they can, and tomorrow too.
America is a democracy, we need to organize change so we aren't governed by banks any more.
Won't you please come to Chicago! We can Change the world!
It may NOT be misplaced if these small banks charge outrageous overdraft fees, hold up deposits to encourage overdrafts, and re-order the processing of transactions to maximize overdraft revenues.
While yeah we'd all like to live in a world where no one overdrafts their account, it happens. Earlier this year any one of my customers could get buyers' remorse and dispute the credit card charge. The bank yanked it out of my account with NO warning whatsoever, creating massive overdraft charges.
I'm a small merchant. Disputes were happening in spite of having signed contracts, doing all the right things that were supposed to protect me and the banks made money on it.
Small banks are not blameless just because they are small.
I hope these protesters and the government can really stick to the banks, because, as we all know, a weak banking sector will be a benefit to our economy, right? LOL
Yes thats right. We CAN imagine a world where banks aren't governing. So could the founding fathers.
Laugh all you want.
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