AIG is a Foolish, Republican Distraction

Good Morning Readers! The news lately has been filled with both Republicans and Democrats screaming bloody murder over the completely unjust bonuses being paid by AIG. I agree there have been lots of mistakes made and that everything should be done to stop those payments, however, I also believe the right wing is driving the scandal to distract from the more important reforms.

Republicans haven't had a lot to crow about lately, so they're thrilled the Democrats dropped the ball involving something as controversial as bonus payouts to failing Wall Street bankers. Sure, AIG under the Obama Administration should have seen this coming, but it's still a GOP distraction.

The GOP operatives pushing this scandal are only interested in political gain. It's a scandal within a scandal. They are conveniently ignoring the fact that Bush and Paulson paid the first installment without any congressional involvement and without excluding bonuses the same way, because they too were afraid of employee lawsuits. Subsequent Capitol Hill and Treasury negotiators were also concerned about employee lawsuits. They were worried about increasing liabilities, something lawmakers care a lot about these days. They all had bigger fish to fry.

That's at the heart of the matter, yet nobody seems to have the balls to talk about it. It's all about politics now, and the Republican spin machine is doing its best to strum the last Democratic nerve. The only thing the Republicans are concerned about is a "gotcha" moment, and the Democrats on Capitol Hill are falling for it all hook, line and sinker. Only President Obama has had the nerve to take responsibility while asking us to focus on the big picture. I agree with him. Let's do it!

The AIG Financial Products Corporation, which is now being dismantled by government appointed executives, is the real scandal. The bonuses are horrible, but the real story is why the financial products division of AIG ever came into existence. Let's not forget the regulatory changes led by Senator Phil Gramm of Texas, Newt Gingrich, and the rest of the Republican Congress during the waning days of the Clinton Administration started this national nightmare. They know it, but for some reason rank and file Republicans ignore it, and average Americans never talk about it.

Sure, Clinton signed it under extreme pressure, and he was wrong to do it, but the real culprits were the Republicans who destroyed the walls that stood between banks, speculative investment brokerage firms, insurance companies, and the rest. Those protections were put in place after things went horribly wrong during the last Republican depression. They were designed to manage greed, PROTECT the free market from its darker side, and in the end keep the wolves out of the hen house. It was the REPUBLICANS WHO DESTROYED IT!

Of course, their deregulation was made worse by the fact that regulators were undermined by the Bush Administration. Oversight was weak at best. The Bush Administration was without a doubt a REACTIVE regulator. They didn't believe in the protections. They didn't do their job. I don't care what my right wing readers say, the Bush Administration could have done more to prevent the crisis. They had the data, they knew about AIG and the $50 TRILLION plus DERIVATIVES market, and they knew about the risk to the whole economy. They did NOTHING! They were at least negligent, and at worst conspiratorial.

My dinner party debates always feature a Republican blaming Congressman Barney Frank, Senator Christopher Dodd, and the usual Democrats for not reigning in Freddie Mac and Fannie Mae. What they never admit is how the Bush Administration had the authority, through dozens of regulatory agencies, to reign in the risk across the board. Many economists feel that most administrations would have done so. It was the Bush Administration, along with the Republican belief in small and unobtrusive government, that failed the American people.

Therefore, let's be angry about the greed on Wall Street, but I think it's more important to keep our eyes on the prize. Let's make sure the Democrats and the Obama Administration do everything necessary to reverse the regulatory changes that allowed the Bush Administration to look the other way. Let's FORCE future Republicans to regulate the risk by creating strong and principled new laws.

Let's reform until we can't reform any more. AIG is the critical patient that needs to be isolated and treated, but it's the Republicans and their broken philosophies about government and the market that represent the deadly contagion. Let's find a vaccine and a cure! Let's make sure we never become victims of their greed and stupidity again.

Thursday's Political Rant - Michael

Evidence that Bush and "Hands-Off" Republicans are Responsible for Crisis

Hello Bloggers - It's a subject that I've been debating both on this blog and in real life with my Republican friends for a VERY long time. Who caused the economic crisis that we're experiencing today?

Most of my Republican friends think it's the Democrat's fault. They usually blame Clinton and the deregulation of the late nineties. Of course, they don't acknowledge that those changes were the result of Republican legislation, a strong Democratic opposition, and ultimately executive or Clinton compromises.

They also like to blame everything on Fannie and Freddie Mac, and the Democrats lack of legislative oversight. Again, they refuse to acknowledge the role of Republicans in the EXECUTIVE branch who were actually responsible for that oversight. There were plenty of regulations available to the EXECUTIVE branch to prevent what happened.

The whole Fannie/Freddie argument is absurd when you look at the laws and regulations in place at the time. Feel free to try and debate it, but it's accurate when you do the research.

So, why am I bringing it all up again, and why is this a RAVE and not a RANT? Because The New York Times/Herald Tribune has published a FANTASTIC - very long and very thorough - new article that does a very good job of describing what went wrong, and describes what I've always said, that GEORGE BUSH AND HIS LACK OF OVERSIGHT is what caused most of the problems. It describes the events in excruciating detail, and does a very good job of placing the blame mostly on BUSH and his "hands-off philosophy.

"We can put light where there's darkness, and hope where there's despondency in this country. And part of it is working together as a nation to encourage folks to own their own home." — President George W. Bush, Oct. 15, 2002

The Times describes how "there are plenty of culprits, like lenders who peddled easy credit, consumers who took on mortgages they could not afford and Wall Street chieftains who loaded up on mortgage-backed securities without regard to the risk. BUT the story of how we got here is partly one of Bush's own making, according to a review of his tenure that included interviews with dozens of current and former administration officials."

The paper adds that "his conviction that markets do best when let alone" coupled with the fact that he "pushed hard to expand homeownership, especially among minorities, an initiative that dovetailed with his ambition to expand the Republican tent — and with the business interests of some of his biggest donors" is very interesting. It adds that "his housing policies and hands-off approach to regulation encouraged lax lending standards."

If you want to learn more, visit the article. I don't have much to add. I've been saying this for over a year now. I've been one of the few screaming about the crisis, even BEFORE it hit the news. Just ask many of my friends. In earlier posts on this blog I described how alarmed I was by the TYPE of mortgage companies that hit the market after Bush. To those paying attention, it was obvious that rules were lax and the market was bloated. Something had to go wrong.

Unfortunately, it went even more wrong than I thought. I never dreamt it would be this bad. The really sad part is the way my Republican friends never want to take any responsibility.

They continue to blame the borrowers (personal responsibility despite corrupt lenders and unmanageable rules governing paperwork), the Democrats (Fannie and Freddie caused everything, despite all the evidence to the contrary), and a few bad lenders (right, a lack of oversight and Wall Street's resale market had nothing to do with it).

I don't bother arguing with them anymore. I don't think they'll ever take responsibility for anything, much less ALL THE DAMAGE THEY CAUSED OVER THE PAST EIGHT YEARS! I just hope those in the middle, the independents and the moderates, learn about what happened, and point the finger of blame where it belongs most, on GEORGE BUSH.

It was his ridiculous hands-off philosophy as president that made him the WORST PRESIDENT IN HISTORY! What a STUPID way to govern. As I always say, thank you so much for electing such MORONS, and for getting us into this mess. For God's sake, TAKE SOME RESPONSIBILITY!

George Bush, and many other "hands-off" Republicans like Gramm and Delay, are responsible. They've caused so much pain and suffering, and yet they're such narcissistic psychos they'll never know the damage they caused. We beg you, please learn from your mistakes, and don't inflict them on us anymore.

Monday's Political Rave #1 - Michael

PS - The White House has published a lengthy rebuttal to the New York Times cover story. I read it, and, like most of their crap, it seems far less convincing with far fewer citations than the Times article.

Using their usual tactics, they call the Times article "gross negligence." In my opinion the Bush Administration is both GROSS and NEGLIGENT in the way they always attack the press.

Well Mr. Bush, it isn't working these days. People know that you're to blame, and that you're also a scoundrel and a liar. Let's see you talk yourself out of this one in the history books.

Political News/Rant: John McCain's Duplicitous Wall Street Connections

Good Morning Bloggers - It's another day so of course I have to point out that John McCain is full of it again - and again, and again. This time it's his relationships with Wall Street industry lobbyists, which completely contradict his claims that he has been trying to fight against Wall Street greed and corruption, and wants to clean up the "old boys network." Based on this and other evidence, the man is running the old boys network for God's sake!

A Raw Story article this morning entitled, Exposed: McCain team includes 83 Wall Street lobbyists, includes an actual list of them.

Excerpts:
As Sen. John McCain (R-AZ) rails against Wall Street while concurrently benefiting from its largess, some journalists are getting tired. David Corn - an investigative reporter formerly with The Nation and currently reporting for Mother Jones - has printed a list of 83 Wall Street lobbyists he says are working for or have bundled contributions for McCain."

The article points out that the Democratic National Committee has counted at least 177 lobbyists overall in the McCain campaign. In addition, the article points out that Wall Street lobbyists and close McCain advisor and friend Phil Gramm went so far as to fight for a provision - now law - to keep credit default swaps unregulated, which many say went a long way to create the current crisis.

"Of those 177 lobbyists,... at least 83 have in recent years lobbied for the financial industry McCain now attacks ... These are high-paid influence-peddlers who have been working the corridors of the nation's capital to win favors and special treatment for investment banks, securities firms, hedge funds, accounting outfits, and insurance companies. Their clients have included AIG, the newest symbol of corporate excess; Lehman Brothers, which filed for bankruptcy on Monday sending the stock market into a tailspin; Merrill Lynch, which was bought out by Bank of America this week; and Washington Mutual, the banking giant that could be the next to fall."

(Read the whole article at: http://rawstory.com/news/2008/McCain_team_includes_83_Wall_Street_0917.html)

I don't know about you guys, but usually when it smells like rotten fish, it's rotten fish. It's incredible to me that McCain supporters are not bothered by FACTS like these. Are you concerned that you're going to harm our nation even more than you already have? Aren't you worried that you might be wrong, and that you could make things worse? I suggest that you have a good long think about what you're planning to do before you give us more of the same. Four more years of heavily lobbied, special-interest, socialized capitalism for the well off. The business community and the nation may not survive more of your bad judgement.

Thursday's Political Rant #1 - Michael

Political Rant: Tar and Feather George Bush, Phil Gramm, and McCain if He Wins

Hello Bloggers - The Dallas Morning News is reporting today that Phil Gramm, the author of the credit crisis along with the Republican Congress and Bill Clinton in 1999, could be a serious problem for John McCain. I think the article is a wonderfully succinct timeline of what led us to this disaster. Break out the tar and feathers people!

Excerpts: John McCain's Phil Gramm problem
"In the late 1990s, former Texas Senator and economics prof engineered financial reform. He led the effort to break down the barriers between traditional banking and investment banking. In a pure economics sense, he was right. Economies of scale, economic growth and wider markets were the byproducts. But deregulation was viewed as king and regulatory oversight became a curse word. Anyone who mentioned the need for balanced regulation was shouted down as a backer of Big Brother/ Big Government. Therein lies McCain's problem."

"Not that long ago, Gramm said the economy was sound and Americans were whiners. Now McCain -- on the day Wall Street implodes and stocks crash -- says the nation's economic fundamentals are sound. I think not."

"The late 1990s and early 2000s gave rise to the era of the Bush Administration's first Securities and Exchange Commissioner, Harvey Pitt, whose claim to infamy was his attempt to allow Corporate America police itself. He also was slow to acknowledge the depth of corporate accounting scandals, and saw no perceived conflict in conducting private meetings with former accounting clients under SEC investigation. And over the years, the SEC -- before and after Pitt -- has been budget compromised, weighed down by too many companies and not enough staff. The pushback to those abuses? Sarbanes-Oxley Act of 2002."

"I think it is telling that the SEC has not been a major player, that the Federal Reserve and Treasury are carrying the burden during this financial crisis. I will be interested in seeing how McCain plans to balance the free market with oversight without re-erecting some barriers or giving regulators more authority to proactively address pending financial threats to the economy."

(Read the whole article at: http://dallasmorningviewsblog.dallasnews.com/archives/2008/09/john-mccains-ph.html)

I posted this article because there are many debates going on about what caused the credit crisis and this week's collapse - this was a good explanation. The culprit is the 1999 Gramm-Leach-Bliley Act that deregulated the industry. The bill was passed with the overwhelming support of Republicans along with a few Blue Dog Democrats and Bill Clinton - NAFTA too, thank you Bill. Clinton and the "Dogs" claimed to support more accessible credit for the middle class, and that's what many Repubicans are now blaming everything on today. They are wrong. The law has many rules in place to guard against the disasters of the past eight years. The blame should rest purely with the Bush Administration, Phil Gramm and his Enron wife, the SEC and Harvey Pitt, and the Treasury. Of course, Alan Greenspan deserves a large chunk of it. If you wish to debate, please be sure to read the actual laws first. In the meantime, get me the tar and feathers!

Tuesday's Political Rant #3 - Michael