25 September 2008

Cliff Stearns, Born Again Regulator

Imagine my surprise last night when I decided to watch Rachel Maddow's new show on MSNBC for the first time. Early in the show, she interviewed one of my heroes, Senator Chris Dodd, about his efforts to bring some sanity to the Wall Street bailout proposal originally put forward by Treasury Secretary Henry Paulson. The interview with Dodd was immediately followed by this interview:
As a resident of Cliff Stearns' district, this was quite a surprise to me. It follows on the even more surprising appearance of Cliff Stearns on the House floor on Tuesday morning, where Stearns appears, with his hair flying and his diction failing, to decry the Paulson proposal (Stearns' comments begin at 5:47 into the clip):

Note especially Stearns' comments at around 8:35 of the clip, where he rails against the fact that in 2003, he was holding hearings on the application of FASB accounting standards to Freddie Mac, but oversight of Freddie Mac was suddenly taken away from his committee.

Why wait five years before protesting this change? It does appear that the hearings he references had the potential to have an impact on operations of Freddie Mac. Here is a statement from Congressman John Dingell commending Stearns for holding the hearings, but cautioning that perhaps better witnesses could be called and warning about the massive lobbying firepower being amassed against any efforts at reform.

Later in 2003, the New York Times would write in a prescient opinion piece:

Even without signs of an imminent calamity, it is hard to argue that these financial enterprises -- essentially two huge hedge funds -- should continue to evade the type of rigorous oversight that banks face on issues like capital requirements and new lines of business. Yet it looks as if Freddie and Fannie, along with the home builders' lobby, may succeed in blocking legislation to transfer regulatory oversight to the Treasury.

The two mortgage enterprises have helped to add liquidity to the housing market and put more working families in new homes. That mission need not be threatened by stronger oversight of their finances. Indeed, it will be protected.

So, although Stearns was holding hearings, he ultimately had oversight of Freddie Mac stripped from his subcommittee. This should have been a situation for him to rise up in righteous indignation and insist that his subcommittee get the jurisdiction back. After all, his party was in charge of both the White House and the both branches of Congress. Instead, Freddie Mac and Fannie Mae continued on their path to destruction with powerful lobbyists paving the way for them to avoid meaningful oversight. Is it possible that Stearns' agitation this week results from a realization that he was in the perfect position to prevent this catastrophe five years ago and failed miserably?

What makes Stearns' behavior this week especially odd (besides his agitation to the point of stumbling over his words a lot) is that this behavior is entirely at odds with his historical voting record. Progressive Punch notes that in the category of "Government Checks on Corporate Power" Stearns receives a score of only 7.57% and ranks him 267th out of 422 members. When the analysis is confined to votes on banks and credit card companies, his score drops to 6.45% and his rank to 283rd of 422. Further, the Washington Post reports that Stearns votes with the Republican position 90.9% of the time, making him, as Maddow noted shaking her head after the interview, "very conservative" and a "strange bedfellow" for this position.

A further point is that if any one bill passed by Congress can be said to be at the root of the current financial crisis, it would have to be Phil Gramm's legislative nullification of Glass-Stegall in 1999. As expected, Stearns voted in favor of this massive roll-back of regulation of the financial industry.

But rest assured, Stearns' rediscovery of regulation is not uniform. In his most recent abuse of the Congressional franking privilege, Stearns warns against the re-imposition of the Fariness Doctrine:
Since the demise of the Fairness Doctrine, talk radio has emerged as a dynamic forum for public debate and an asset to the nation.


Bringing back the Fairness Doctrine would amount to government control over political views expressed on the public airwaves. It is dangerous to suggest the government should be in the business of rationing free speech.
Now that's the Cliff Stearns I know. Yeah, we can't have the government require that someone should have air time to refute Rush Limbaugh's daily dose of hate.

Cross-posted on The Case Against Cliff.

20 September 2008

My Letter to Chris Dodd

September 20, 2008

Senator Christopher J. Dodd

448 Russell Building

Washington, DC 20510

FAX (202) 224-1083

Dear Senator Dodd,

My name is Jim White and I am writing you from Gainesville, Florida. I was the commenter on Glenn Greenwald’s blog at Salon.com who first suggested last year that we work to find someone in the Senate to place a hold on retroactive immunity for the telecommunications companies. Although we did not win that battle, I want to express my sincere gratitude for your very hard work on behalf of our Constitution and on behalf of the citizens of the United States.

I am writing today to urge caution with regard to the Wall Street bail-out legislation being proposed this weekend by the Bush Administration. As we have learned from Naomi Klein’s well documented research in The Shock Doctrine, it is in times such as the currently ongoing crisis when significant damage can be done to the rights and the interests of the common citizen. Please examine the proposed legislation closely with regard to whether it decreases regulatory oversight of the markets and whether it enables a massive transfer of public wealth to private parties. Experience teaches us that those are the goals of many of those who likely have crafted this legislation, and yet, those goals also lie at the root cause of the current crisis.

Rather than merely creating a government agency to act as a virtual “toxic waste dump” for the bad debt many firms have accumulated, Ian Welsh at Firedoglake yesterday suggested that the efforts instead should center on the government entity buying individual mortgages, re-valuing the homes and then writing new, fixed mortgages at low rates. Such a program could place strict limits on subsequent refinancing and could allow government participation in profits when the home is sold later.

At the very least, if massive off-loading of debt from troubled companies is going to occur, my plea is that provisions are included in the legislation to insure that the highest levels of management in these troubled companies suffer economic losses at least as severe as those suffered by stockholders in those companies. If management in these companies is allowed to emerge from the crisis with their massive wealth unscathed, then our country truly will have entered a perverted form of socialism in which we have privatized the profit and socialized the risk of the highest levels of our economic activity. Economic losses for these upper level managers need to be personal, direct and significant. Of special importance is that the personal assets these managers have sent overseas need to be subject to these fines. The unifying theme I have seen expressed for this idea is “Seize ill-gotten gains”. If this is not a part of the overall program enacted, I fear massive civil unrest coupled with even more massive repression. The history and the warnings in Klein’s book should be heeded on this point.

If at all possible, I urge your committee to seek input from Naomi Klein. Her interview on BBC recorded on Thursday of this week provides evidence of the value of her interpretation of current events and what should be done. She would be able to point out the flaws in proposals that would tend toward exacerbating rather than relieving the crisis. Similarly, input from Joseph Stiglitz and Paul Krugman could provide counter-arguments to those who insist that the only solutions are centered on unregulated free markets and privatization of government functions.

As you so elegantly stated in the battle over retroactive immunity, our Constitution is a vital document whose genius lies in part in the system of checks and balances. Many of the problems our country now faces come from the loss of this function. The Wall Street crisis could serve as the opportunity finally to start turning our country back toward those principles on which it was founded. The Congress does not need merely to accept whatever legislation the Bush Administration crafts and to implement it without examination. Please take the lead in assuring that the legislation put forward will be based on Constitutional principles and that it will protect the rights and interests of all citizens, not just the wealth of large corporations.

Thank you for your continuing dedicated and distinguished service to our country.


Jim White

15 September 2008

Two Thirds Disagree with John McCain on Presidential Powers

In a poll released today by AP in conjunction with the National Constitution Center, we find the results of a poll of 1000 adults in the US. I want to concentrate on only one question and its responses:

Only 29% of those polled favor, either strongly or even somewhat, giving the president more power at the expense of the power of Congress or the courts. A full 67% oppose that idea, with 50% opposing it strongly.

That is a very interesting result in light of John McCain's recent actions regarding the powers of the president. In September of 2006, the Senate passed the Military Commissions Act. Prior to passage, McCain, Lindsey Graham and John Warner staged a bit of political theater, pretending to want to remove all possibility for detainees at Guantanamo and elsewhere in US custody to be tortured. In the end, however, they capitulated entirely to George W. Bush, and did so in a way to undermine just those Constitutional protections that the people in the poll above want protected.

Here is how the New York Times described what happened:

The bill would set up rules for the military commissions that will allow the government to proceed with the prosecutions of high-level detainees including Khalid Shaikh Mohammed, considered the mastermind of the Sept. 11, 2001, attacks.

It would make illegal several broadly defined abuses of detainees, while leaving it to the president to establish specific permissible interrogation techniques. And it would strip detainees of a habeas corpus right to challenge their detentions in court.

So, after pretending to be upholding a righteous stand against torture, McCain, as the leader of this stand, then brokered a "compromise" which would leave it "to the president to establish specific permissible interrogation techniques."

The New York Times, in the same article, noted reaction to the bill:
Human rights groups called the vote to approve the bill “dangerous” and “disappointing.” Critics feared that it left the president a large loophole by allowing him to set specific interrogation techniques.
It is hard to imagine how out of touch with the thinking of US citizens John McCain is when it comes to presidential power and torture. A full two thirds of Americans disagree with his views and only 15% strongly favor them.

For the record, it should be pointed out that while John McCain voted in favor of the Military Commissions Act, Barack Obama, Joe Biden and Hillary Clinton all voted against it.