Such Short Memories: The Worst President Since World War II? Uh, Guess Again!

Reblogged from mykeystrokes.com:

When George W. Bush was inaugurated president of the United States on January 20, 2001, the unemployment rate stood at 2.4 percent. By the time Dubya completed his second term in office on January 19, 2009, the unemployment rate at risen to 7 percent. When Dubya took office in 2001, he was left with a budget surplus of $127.3 billion. When he completed his second term, he left a budget deficit of $1.4 trillion.

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Are We Returning to a Path of Owing Our Souls to the Company Store?

The Center for American Progress recently completed two related reports that are read-worthy:

Cash for Homes: Policy Implications of an Investor-Led Housing Recovery

Across the country, investors have been taking advantage of the nation’s foreclosure crisis to purchase homes at bargain prices, often beating out potential homeowners who have been a bit hesitant to purchase, frequently choosing to sideline themselves. In July 2013, cash-on-hand investors bought about 55 percent of the homes sold in Las Vegas and numerous properties in other major metropolitan areas such as Miami, Phoenix, and Prince George’s County, Maryland, a suburb of Washington, D.C.

Investors can play a key role in a housing recovery. By absorbing excess inventory, they establish a floor for home prices and jump-start appreciation. Responsible investors can also offer quality, affordable rental opportunities to families who may be locked out of home ownership due to foreclosure or lost wealth from the recession.

But while they can support communities, irresponsible investors can also destroy them by allowing properties to sit empty, declining to bring rental properties up to code, and neglecting tenants’ needs in instances where the home is occupied. Additionally, investors that buy large quantities of properties in a single area can cause prices to overheat and increase market volatility. Conversely, if institutional investors following a set business plan sell numerous properties in the same time frame, prices in those neighborhoods could decline again.

Read this full PDF report here

When Wall Street Buys Main Street
The Implications of Single-Family Rental Bonds for Tenants and Housing Markets

In October 2013, an institutional investor created the first triple-A-rated, mortgage-backed security supported by revenue from single-family rental properties, a development that may offer even lower-cost financing to institutional buyers than has been available thus far through bank credit lines. A mortgage-backed security is created by pooling assets together and then selling interests in that pool to investors, who then receive regular payments from the asset pool. This process provides access to a much larger pool of investors than would otherwise be feasible, increasing liquidity and generally providing a less expensive source of funding than traditional borrowing from banks or private investors.

In this instance, a subsidiary of the private equity firm Blackstone took out a $479.1 million loan from Deutsche Bank that was secured by a pool of more than 3,000 single-family rental homes. The loan was then turned into a security that was purchased by investors, who now receive monthly rental cash payments from the homes. If the loan is not repaid, the trustee—the legal representative of the bondholders—has the right to seize the homes.

The emergence of a new form of mortgage-backed securities tied to single-family rentals is certain to have an impact on the housing market, communities, and tenants. Analysts predict that the funding of single-family rental acquisitions through securitization will likely become a dominant model quickly; American Homes 4 Rent and Colony American Homes, two new single-family rental firms, are reportedly preparing to launch single-family rental bonds in the coming months. The market for this new asset class is expected to top $70 billion per year by 2016, on par with the bond financing for apartment buildings, casinos, and commercial real estate for this year. While institutional investors only represent a fraction of those in the housing market—mid-sized companies and small mom-and-pop investors who own less than 10 properties are currently far more prevalent in most markets—securitization may begin to shift this balance.

Depending on the success of this new asset class, investor appetite for these types of bonds may boost the size and scope of this relatively new and untested industry to a level that may not be sustainable, either because the industry does not have the capacity to manage thousands of new homes or because a significant increase in purchases inflates home prices.

Read the full PDF Report here.


This material above was created by the Center for American Progress Action Fund. It was created for the Progress Report, the daily e-mail publication of the Center for American Progress Action Fund. Click here to subscribe.

Making the World Safer for the Next Bernie Madoff

Lawmakers are pushing a bill that would hand the oversight of investment advisers to an organization with an inherent conflict of interest.

By Joe Newman

Joe Newman

Sometimes, members of Congress follow harebrained logic. If the consequences weren’t so serious, it would be hilarious.

Consider a House bill co-sponsored by Reps. Spencer Bachus (R-AL) and Carolyn McCarthy (D-NY) that would essentially let investment advisers regulate themselves.

This idea stinks. Everyone knows: You don’t let the fox guard the henhouse.

Bachus and McCarthy say their Investment Adviser Oversight Act of 2012 tightens up needed supervision of large investment advisers — the people you trust to handle your retirement nest egg.

It’s true that the federal oversight of investment advisers is sorely lacking. The Securities and Exchange Commission (SEC) only regulates investment advisers handling more than $25 million in assets, while the states oversee the smaller-scale ones.

(David Paul Ohmer / Flickr)
(David Paul Ohmer / Flickr)

Yet the SEC is so understaffed it has never examined 40 percent of the investment advisers under its jurisdiction. The agency reviewed only 8 percent of the more than 12,600 investment advisers it oversees last year.

And while new rules will shift about 2,000 mid-size advisers (those who oversee up to $100 million in assets) to state jurisdiction at the end of June, some industry analysts saythe move will do little to ease the SEC’s workload.

Here’s where this bill’s logic gets silly. Rather than address the SEC’s shortcomings by boosting its budget, it shifts responsibility for the investment advisers under SEC jurisdiction to an organization controlled and financed by Wall Street. That would probably be the Financial Industry Regulatory Authority. This group, known as FINRA, suffers from an inherent conflict of interest because it collects membership fees from the very securities firms it oversees. This arrangement undermines its ability to regulate Wall Street — and its own credibility.

Compounding this conflict of interest is the financial group’s troubling lack of transparency and accountability. Even Big Business lobbies such as the Chamber of Commerce have complained that unlike the SEC, FINRA isn’t required to comply with the Freedom of Information Act, which allows it to keep many of its records hidden from journalists and watchdog groups, including my own.

Even when it does produce documents, there can be problems. An SEC administrative order issued last year found that the Financial Industry Regulatory Authority had altered minutes of its staff meetings before turning the documents over to the SEC. The agency found that it was the third time in eight years that it had tried to mislead the SEC this way.

In a letter my organization sent to the House Financial Services Committee last month, we pointed out recent examples of ties between current and former FINRA officials and firms that were later investigated or charged with fraud involving major investor losses.

Who tops that list? Bernie Madoff, the man who bilked investors of at least $64 billion in the largest Ponzi scheme ever. Not only had Madoff served as chairman of the NASDAQ stock exchange in the early 1990s, his brother, son, and niece all had ties to either FINRA or its predecessor, the National Association of Securities Dealers (NASD).

While there was no indication that family members helped Madoff avoid scrutiny, it’s clear that FINRA and the SEC ignored tips that would have exposed Madoff’s scheme years earlier.

Harry Markopolos, the private financial fraud investigator credited with discovering Madoff’s scheme and reporting it to the SEC, was asked by a congressional committee if he ever considered taking his findings to NASD or FINRA.

Not a chance, Markopolos said.

“What I found them to be was a very corrupt, self-regulatory organization, that if you took a fraud to them, they would ignore it as soon as they received it,” Markopolos testified. “They were there to assist [the] industry by avoiding stricter regulation from the SEC.”

And while Madoff’s scam didn’t’ trigger the financial crisis, what did bring us to the brink was risky, questionable behavior by Wall Street traders.

Incredibly, as we continue to claw our way out of the hole that Wall Street’s greed put us in, some lawmakers want to rig the system in the financial industry’s favor.

Congress should reject the Bachus-McCarthy Investment Adviser Oversight bill. This is no time to loosen Wall Street oversight.


Joe Newman is the director of communications for the Project On Government Oversight. www.pogo.org  — Distributed via OtherWords (OtherWords.org)

The Battle for Wall Street Reform Continues

— Op-Ed by Elizabeth Warren | The Boston Globe

Since the great financial crisis of 2008, big bank CEOs and their lobbyists have led the charge to block efforts to regulate Wall Street. Their message has been clear: leave it to us — the big Wall Street banks — to regulate ourselves because we’re the only ones who understand how the world really works.

When JP Morgan CEO Jamie Dimon announced a $2 billion loss from trades he called “stupid,” “sloppy” and “poorly monitored” last week, he didn’t change his mind about who he thinks should call the shots. Dimon said he would clean this mess up himself and indicated that it would be business-as-usual in no time at all. “We will learn from it, we will fix it, and we will move on.” The message to those who think there should be more oversight of the biggest banks was clear: stay out.

After the crash of 2008, the country called for greater oversight of the biggest financial institutions to prevent another crash. But even after billions in taxpayer-funded bailouts, Wall Street resisted change. When the battle for financial reform took place in 2010, thundering herds of lobbyists filled the halls of Congress trying to undermine meaningful changes.

Reforms got pushed in different directions. Oversight of community banks and credit unions was in many cases ramped up, even though they were not the ones who brought down the economy. Meanwhile, the biggest banks fought off many key regulations that might reduce their size or cut into their profitability. While many new rules made it through, too many others were stopped cold.

Even after Dodd-Frank became law, the fight wasn’t over. Open public debate turned into guerrilla warfare over rules to put the law to work. For two years now, Wall Street bankers and their lobbyists have pushed regulators to water down those rules and have pushed for loopholes for their lawyers to wiggle through.

They have also urged Congress to gut the funding for enforcement at the regulatory agencies and to chip away at the independence of the new Consumer Financial Protection Bureau. And they have continued to bankroll candidates for public office and pour funds into their lobbying, hoping they can pull the strings without anyone noticing.

According to the Center for Responsive Politics, in 2011 alone, the financial industry spent more than $161 million on lobbying efforts. Jamie Dimon and JP Morgan, for example, spent more than $7.6 million lobbying in 2011 and almost $2 million more as of this April. Perhaps most prominently, JP Morgan has forcefully opposed the Volcker Rule, which restricts certain kinds of speculative trades that increase risk in the banking system.

The specific laws are technical and complex, and already there are a number of commentators who point out that even the Volcker Rule might not have prevented the particular problem that led JP Morgan to lose $2 billion in a matter of weeks. Others note that JP Morgan has enough money that it can afford a $2 billion loss.

But these comments miss the basic point: too often, Wall Street banks act like they alone should decide if they have taken on too much risk. If the big bank CEOs ran different kinds of companies, ones that weren’t big enough to take down the entire economy when they get it wrong, then oversight would be less critical. But reckless gambling by the big banks can affect the jobs, the pensions and the tax bills of every American — and that means that those company’s actions should be subject to careful oversight.

That’s what government does: it passes laws to keep markets honest, and it puts a smart cop on the beat to enforce those laws. It is hard, but it isn’t brain surgery. And it starts only if we have a Congress that has the guts to stand up to the big banks and their armies of lobbyists.

Elizabeth Warren is a Democratic candidate for US Senate.

Under the Reading Lamp — 3/12/2012



Physicians in Congress Committing Malpractice on Millions

imageWhat would you think if your physician told you, “Keep smoking because quitting would kill tobacco and health care jobs.” Or, “Don’t take your high blood pressure medicine, you can’t afford it.” And, “Don’t lose weight, no one has proven obesity is bad for you.” That’s exactly the quality of medical advice we are getting from the 18 Republican physicians currently serving in Congress. Some of the most well known are the father and son team of Rep. Ron Paul and Sen. Rand Paul, and Sen. Tom Coburn. Some of the most well known are the father and son team of Rep. Ron Paul and Sen. Rand Paul, and Sen. Tom Coburn. Almost all of these physician/Congressmen have been key soldiers in the Republican war on the Environmental Protection Agency (EPA), calling it a “job killer,” pronouncing relevant health science “unproven,” claiming we “can’t afford” their regulations.


Nine States Have Legalized Malpractice Against Women

Prenatal testing during pregnancy is offered with the goal of identifying medical conditions that affect a fetus. Some of these medical conditions can be treated, other times knowing about the diagnosis in advance will affect how or even when the delivery occurs, and sometimes a condition is identified that leads a woman to choose an abortion. Although women in Pennsylvania, North Dakota, South Dakota, Utah, Idaho, Indiana, Missouri, Minnesota, North Carolina might not get to hear all of their medical information. In these standard bearing states for misogyny a doctor is allowed to withhold information that they think could lead to an abortion and not be sued as a result. These are called “wrongful birth laws” and they allow doctors to put their own personal beliefs first, free of legal repercussions


Reid: Republicans Exaggerating Benefits of Keystone XL Pipeline

imgresRepublican claims about the benefits of the Keystone XL oil pipeline are greatly overblown, Senate Majority Leader Harry Reid (D-Nev.) said Sunday.  “It won’t lower the price of oil. Construction won’t be complete for a long, long time,” Reid said during an interview on CNN’s State of the Union, referring to the proposed Alberta, Canada, to Texas pipeline. “And under the way it’s constructed now, all the oil would be sold elsewhere. We can’t have that. When I say elsewhere, I mean to some other country.”


Electoral chaos-History repeats? The “house” decides?

In 2012, there will be a 3-way battle for the White House. One of these days the media’s is actually going to share that fact with the rest of the country — but only when the New York Times et all are ready to take us on their journey into uncharted territory. A third party nominating platform will  have ballot access in all 50 states. They will select an Internet nominee through a nominating process. 6 qualified candidates will be ‘drafted” by the public. One lucky politician is going to get “the yellow brick road” to the White House.


The Border Wall: The Last Stand at Making the US a White Gated Community

Mark Karlin, Truthout: “The construction of the ‘barrier’ wall – accompanying large-scale militarization (the Border Patrol, Immigration and Customs Enforcement, the FBI, the Drug Enforcement Agency, the FBI, the military etc.) – is on America’s southern border, and there is meaning in that. Its location is prima facie evidence that the ‘immigration issue’ is really a euphemism for keeping poor brown-skinned people out of the US – as well as creating a ‘practice’ zone for protecting American economic and political interests in Mexico and Central America.”


How Public Sector Layoffs Are Holding Back the Recovery


Heather Boushey, ThinkProgress: “The current economic recovery is going well if one looks at private sector job creation. The pace of private sector job creation is slower than in the recovery from the early 1990s recession … Since early 2009, governments at all levels have shed nearly 700,000 jobs, most of them at the state and local level. Since August of 2008 state and local governments have shed a total of 647,000 workers, of which 64 percent were women workers.”


Canadian Government Targeting Opponents of New Oil Sands Pipeline 

Lisa Song, InsideClimate News: “As US environmental groups renew their battle against the resurrected Keystone XL oil pipeline, their counterparts in Canada are facing a deeper problem – a government campaign to limit their influence over Canada’s Northern Gateway pipeline…. As environmental groups have stepped up their campaigns against the project, key figures in the Harper administration have publicly denounced them as extremists, and a federal finance committee has announced plans to audit all of Canada’s charities.”


Environmental Protection Agency Puts Greenhouse Gas Rules for Oil Refineries on Backburner

Elizabeth McGowan, InsideClimate News: “Election-year politics, $4-a-gallon gasoline and an anti-regulatory fervor on Capitol Hill have aligned to thwart EPA’s vow to issue final carbon emissions standards for oil refineries this year…. The pullback on refineries – combined with an earlier and separate delay on regulating greenhouse gases from fossil fuel power plants – means EPA has yet to control emissions from a pair of sizable industrial sources.”


Welcome to the 1% Recovery

Mike Konczal, New Deal 2.0: “As the one percent reap 93 percent of the income gains from the recovery, we’re rapidly returning to pre-New Deal levels of inequality … It’s important to remember that a series of choices were made during the New Deal to react to runaway inequality, including changes to progressive taxation, financial regulation, monetary policy, labor unionization, and the provisioning of public goods and guaranteed social insurance. A battle will be fought over the next decade on all these fronts.”


A Field of Hawks

Eugene Robinson, Washington Post Writers Group: “Unless Ron Paul somehow wins the nomination, it looks as if a vote for the Republican presidential candidate this fall will be a vote for war with Iran. No other conclusion can be drawn from parsing the candidates’ public remarks. Paul, of course, is basically an isolationist who believes it is none of our business if Iran wants to build nuclear weapons…. But Paul has about as much chance of winning the GOP nomination as I do.”


A Sex Ed 101 Curriculum for Conservatives

Recent national kerfuffles over abortion and contraception access bring up many important questions: Should employers retain control over your wages and benefits after they sign them over to you? Is contraception, a service used by 99 percent of American women, really so controversial? How much state regulation should there be over women’s most private decisions? But amidst all those questions is one overarching one: Do conservatives need a crash course in sex ed?


Julie Gillard’s Rise Marks the Triumph of Machine Politics Over Feminism

John Pilger, Truthout: “In 1963, a senior Australian government official, A.R. Taysom, deliberated on the wisdom of deploying women as trade representatives. ‘Such an appointee would not stay young and attractive forever [because] a spinster lady can, and very often does, turn into something of a battle-axe with the passing years [whereas] a man usually mellows.’ On International Women’s Day on March 8, such primitive views were worth recalling; but what has happened to modern feminism? Why is it so bereft of its political, indeed socialist roots that any woman who ‘achieves’ within an immoral system is to be admired?”


Busted for Busting Out at Bank of America

Medea Benjamin, Op-Ed: The women in the cell were proud of us for standing up to the banks; so were some of the police. “They were arrested for protesting against foreclosures at Bank of America,” one of the policemen told a policewoman while I was being fingerprinted. “I’m with you there,” she said. “Those bankers are thieves. They take government money to bail them out but then they refuse to lend money to black women like me. I lost my house because I couldn’t get a bank loan, even though I have a good, steady job.”


Jim Hightower | Attack of the Billionaires

Jim Hightower, Op-Ed: “Hosted by the billionaire Koch brothers at the posh Renaissance Esmeralda golf resort in California’s Palm Springs desert in early February, the confabulees were mobilizing and monetizing what Charles Koch called the “mother of all wars.” That would be their self-proclaimed war to enthrone their ilk over workers, consumers, the environment, and democracy itself.”


Catholicism is Not the Tea Party at Prayer

E.J. Dionne Jr., Op-Ed: “The nation’s Roman Catholic bishops will make an important decision this week: Do they want to defend the church’s legitimate interest in religious autonomy, or do they want to wage an election-year war against President Obama? And do the most conservative bishops want to junk the Roman Catholic Church as we have known it, with its deep commitment to both life and social justice, and turn it into the Tea Party at prayer?”


Efficiency Standards to Save Americans More Than $1 Trillion by 2035

Stephen Lacey, News Analysis: Assuming that 11 new standards being considered for computer equipment, electric motors, fans, and pumps get established, the U.S. could see a 14% reduction in annual electricity use by 2035 compared with current projections. According to the ACEEE report, assuming household appliances are updated every 15 years through 2040, the average American household could save 180 megawatt-hours of electricity and over 200,000 gallons of water. Translated into understandable figures: Roughly $30,000.


Tom Engelhardt | The 0% Doctrine

Tom Engelhardt, Op-Ed: “The president had offered a new definition of “aggression” against this country and a new war doctrine to go with it. He would, he insisted, take the U.S. to war not to stop another nation from attacking us or even threatening to do so, but simply to stop it from building a nuclear weapon — and he would act even if that country were incapable of targeting the United States. That should have been news.”