The Santelli Screed Hits Wrong Target on Mortgage Bailout
March 3, 2009 9:18 am

Dean Baker,

.....When we follow the money, we see that the government checks do not go to homeowners. The government checks are all made out to banks and loan servicers. In millions of cases where homeowners were not keeping up with their mortgages, the government will send checks to banks and investors that make up for much of the shortfall. In addition, the government could send them several thousand dollars more for their efforts in allowing people to stay in their homes......

......Santelli's screed is part of a continuing effort to blame the poor and minority communities for the economic meltdown. There are millions of people who think the Community Reinvestment Act (CRA) was responsible for bad mortgages, when most of these mortgages were either made by institutions that were not covered by the CRA or were loans that would not have been covered by the Act even if the institution was covered. Of course, the idea that government bureaucrats were forcing banks to make loans that were hugely profitable at the time is laughable on its face.

At some point Santelli and his followers are going to have to deal with reality. The problem is not poor and moderate-income homeowners or African-Americans or Latinos. The perps in this case where rich bankers, the vast majority of whom were white males......

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End of the World, the Employee Free Choice Act
March 3, 2009 11:03 am

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If It's "Too Big to Fail," Then It's Too Big to Be Private
March 3, 2009 3:57 pm

David Sirota

...The term "too big to fail" is a euphemism for any institution that is so important to the entire nation's most basic well being, that society cannot let that institution fail. This is why one of the foundational principles of civilized society has always been nationalization - ie. government control - of the institutions that are "too big to fail": institutions like the military, whose failure would mean a basic loss of national security; law enforcement, whose failure would mean a basic loss of civil order; and infrastructure construction, whose failure would mean the crumbling of commerce. The government, as the most powerful representative of society as a whole, runs these institutions/services because they are too important to be allowed to fail.

Unfortunately, as of hard-right and center-right ideologues have ran our government for three decades, they gutted the basic laws and enforcement mechanisms (financial regulations, anti-trust prosecutions, etc.) that prevented a myriad of financial institutions from becoming "too big to fail."

The American Insurance Group is the best example of this - a company that, as the New York Times notes, essentially based its business on a risky scheme to sell insurance to other corporations against colossal housing market failure.

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Daily Show: CNBC Gives Financial Advice
March 6, 2009 4:32 am

This is an amazing countdown of bad advice given by CNBC, and now they have the gall to call homeowners losers because they did not see the warning signs.

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Claire McCaskill kills Senate Republicans
March 6, 2009 10:42 pm

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The Thin Line Between Socialism and Capitalist Nirvana
March 7, 2009 8:00 pm

John Cole

The 2010 proposed rate of 39.60% = socialism.
The 2002-2008 rates of 35.00% = capitalist nirvana.
The 39.6% rate of the 1990’s = socialism.
Everything else = down the memory hole.

That Obama fellow sure is soaking the rich, isn’t he?

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Is Obama responsible for Wall Street's meltdown?
March 7, 2009 10:19 pm

It's an absurd argument, but that's where populist rage on the right is heading.

By Robert Reich

Is Obama responsible for the meltdown of the Dow? The consistently wrongheaded Wall Street Journal's editorial page says so, as does Republican Fox News, CNN's reliably demagogic Lou Dobbs, and now CNBC (where, full disclosure, I frequently appear as a token liberal). CNBC's Jim Cramer, who bloviates nightly about stock picks, says Obama is pushing a "radical agenda" that's destroying investors' wealth. My friend Larry Kudlow, who rants nightly about nearly everything, says Obama is destroying capitalism. CNBC reporter Rick Santelli's ballistic nonsense about Obama's mortgage plan made him a pop-populist icon for a week or so.

The argument that Obama is somehow responsible for the collapse of Wall Street is absurd. First, every major policy that led to this collapse occurred under George W.'s watch (or, more accurately, his failure to watch). The housing and financial bubbles were created under Bush and exploded under Bush. The stock market began to collapse under Bush.

Second, it's inevitable that stocks, led by the bloated financial sector, would lose their remaining hot air as the new administration begins "stress-testing" the big banks, many of which are technically insolvent. After all, their share prices were built on a tissue of lies and dreams. Other sectors whose values were similarly distorted and distended by years of financial deception and regulatory disregard, such as housing and insurance, will also have to return to the real world before they can recover. Which could mean more stock losses.

Finally, none of the financial wizards who are now charging Obama with leading America into the abyss have offered an alternative plan for getting us out of the mess that, not incidentally, many of these same wizards happily led us into. For years, the Wall Street Journal editorial page and the financial gurus of cable news cheered as Wall Street leveraged its way into oblivion..........

Worse: When it turns out that people like Lloyd Blankfein, the CEO of Goldman Sachs, who took home $68 million in 1997, was the only Wall Streeter in a meeting last September at the New York Federal Reserve to discuss the initial AIG bailout with Tim Geithner, then New York Fed chair, among others, at the very time Goldman was AIG's largest trading partner, a distinct scent of self-dealing begins to emanate. When it turns out that Citigroup got a bailout deal last October far more generous than that given to any other distressed bank, when a top Citi executive was advising the Treasury and Fed, the scent increases. Goldman's past CEO was treasury secretary at that time, by the way, and another former Goldman CEO was a top Citi official and also a former treasury secretary. I am not suggesting anything so crude as corruption. But could it be, given these tangled webs, that -- innocently, unintentionally, perhaps even subconsciously -- the entire bailout effort was premised on saving these companies rather than protecting the public? Or that the distinction between the two was lost, and still is?.........

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The media's tax fraud
March 8, 2009 6:38 pm

by Jamison Foser

When is a tax cut for 98 percent of taxpayers portrayed as a tax increase? When some of the small handful of people whose taxes will go up happen to control the nation's news media.

Last week, President Obama unveiled a budget outline that extends the Bush tax cuts for all but the top two percent of taxpayers and makes permanent a tax credit of up to $800 for low- and middle-income workers that was included in the recent stimulus package, among other tax cuts.

On the other hand, individual taxpayers with taxable income above $200,000 ($250,000 for families) per year would pay more in taxes under Obama's plan, under which the tax rates paid on income in the top brackets would revert to their levels under President Clinton in the 1990s -- from 33 and 35 percent to 36 and 39.6 percent. Slate.com's Daniel Gross estimates that for someone with $350,000 in income, this will amount to about $1,500 a year in increased taxes.

So: Obama's plan cuts taxes for the vast majority of Americans, while raising them for the small number of people who make more than $200,000.

But the media, eager to hype their bogus "war on the wealthy" storyline, have portrayed it as a tax increase.

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How the Rules Were Rigged
March 8, 2009 10:14 pm

By Josh Marshall

I'm sure the knowledgeable people already know this. But it turns out that one of the features of the 2005 Bankruptcy bill was to put derivative counter parties at the front of the line ahead of other creditors in bankruptcy proceedings. Actually, from what I can tell, they don't just go to the head of the line. They got to skip the line entirely. As the Financial Times noted last fall, "the 2005 changes made clear that certain derivatives and financial transactions were exempt from provisions in the bankruptcy code that freeze a failed company's assets until a court decides how to apportion them among creditors." As the article notes, ironically, this provision which Wall Street pushed for and got to protect investment banks actually ended up hastening the collapse of Lehman and Bear Stearns last year.

Down in the article there are also the mentions of the entertainingly named "International Swaps and Derivatives Association", one of the lobbies that helped get the change in place.......

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