By Raquel Brown, Media Consortium Blogger

Senate Democrats in the Environment and Public Works Committee (EPW) finally squelched Republican boycotts and passed a version of the climate bill yesterday morning. Last week, Republican Senators refused to show up to committee hearings in an attempt to stall the bill. Brian Beutler of Talking Points Memo notes that EPW has now set "the stage for other panels to amend the legislation."

by Zach Carter, Media Consortium Blogger

Last week, President Barack Obama released key legislation designed to fight the banking industry's too-big-to-fail problem. But Obama's plan doesn't actually address too-big-to-fail at all. It reinforces a broken system in which economically dangerous companies are bailed out whenever they drive themselves to the brink of failure.

If we want the economy to support all people, we have to break up the big banks and start treating the creation of good jobs as an economic priority on par with Wall Street rescues.

The editors of The Nation break the political debate over banking into three camps:

   
• The first camp is composed of bank lobbyists, Republicans and conservative Democrats and wants to do nothing.

   
• Camp two, endorsed by the White House and influential Rep. Barney Frank (D-MA), would impose tougher regulations on too-big-to-fail banks to keep them from getting out of control.

   
• The third camp wants to go even further: If a bank is too-big-to-fail, it is also too-big-to-regulate. Companies that pose a danger to the economy have to be split up into smaller firms that cannot induce economic ruin.

The Nation editors rightly see the third strategy as the most sensible. While the "break-up-the-banks" policy is being portrayed as a left-wing pipe dream by cable news networks, the policy actually relies on an age-old observation of conservative economists. Regulators make mistakes, and they often get co-opted by the very industries they are supposed to be supervising.

The practical policy is to impose structural limits on what activities banks can participate in and how big they can get. Just look at the list of high-profile supporters: former Federal Reserve Chairman Paul Volcker, former Citigroup Chairman John Reed, Bank of England Governor Mervyn King. I don't remember seeing any of those guys at the Iraq War protests.

Many of the regulatory blind spots that brought down the economy were obvious to some policymakers for years. Back in 1994, Sen. Byron Dorgan (D-ND) wrote an article for The Washington Monthly warning that derivatives trading was putting the economy in grave danger. Commodities Futures Trading Commission Chair Brooksley Born tried to take action on these derivatives, but was overruled by other regulators, including then-Fed Chair Alan Greenspan, and then-Treasury Secretary Lawrence Summers, now the top economic adviser to President Obama. Summers and Greenspan even convinced Congress to pass a law banning the regulation of key derivatives, including credit default swaps, which ultimately brought down insurance giant AIG.

Fifteen years after Dorgan's article first ran, The Washington Monthly is featuring it again, along with a recent speech by Dorgan that details massive failures in Wall Street and Washington.

"We had regulators come to town in recent years and willfully boasted that they wanted to be blind as regulators," Dorgan says.

There are good elements of Obama's plan to deal with too-big-to-fail. It gives policymakers the option of putting a too-big-to-fail institution through a special bankruptcy process administered by the executive branch, thus avoiding the problems created in bankruptcy court when Lehman Brothers failed. But the bad part is really bad: Officials would also have the option to provide unlimited bailouts to Big Finance via loans, guarantees and even asset purchases.

As Mike Lillis notes for The Washington Independent, some responsible Democrats like Rep. Brad Sherman (D-CA) have been objecting to this aspect of the legislation for months. Sherman, in fact, calls it "TARP on steroids," noting that the bank bailout at least came with some meager oversight and a limit on the program's actual size.

The bank lobby is spending money like mad to maintain their stranglehold on the economy. Neither Congress or the administration will change course without intense public pressure. So it was very reassuring last week to see thousands of people protesting the annual meeting of top bank lobby group, the American Bankers Association. David Moberg chronicles the protest in a blog post for Working In These Times that covers speeches by both key union leaders and ordinary people facing foreclosure after watching their tax dollars go to the very bankers who wrecked the economy.

"There was broad agreement on anger at the banks for providing so little, if any, public benefit for the massive bail-out, and for so quickly returning to the greed and abuse that precipitated the crisis," Moberg writes.

Laura Flanders covers the protests for GRITtv, including video of protesters chanting "Bust up big banks!" In a roundtable discussion with Christina Clausen of the United Food & Commercial Workers Union, George Goehl of National People's Action and Rob Robertson of the Right To The City Alliance, Rolling Stone journalist Matt Taibbi explains the overriding impotence of the regulations Congress is about to approve. Regulators will not be able to crack down on abusive derivatives, a full 8,000 of 8,200 banks will be exempt from Consumer Financial Protection Agency oversight, while the same agencies that screwed up heading into this crisis will be charged with preventing the next one.

"They've had sweeping powers to do whatever they wanted," Taibbi says. "They've had this regulatory power all along."

What we need are good jobs, and lots of them. Obama's economic stimulus package has made tangible economic progress. It's saved hundreds of thousands of jobs, and is clearly responsible for the turnaround in gross domestic product (GDP) we saw in the third quarter. But a full 17% of the workforce remains unable to find full-time work, as Julianne Malveux explains for The Progressive.

When Wall Street crashed in 1929 and unleashed the Great Depression, the government eventually stepped in as an employer-of-last-resort. The Works Progress Administration (WPA) and Civilian Conservation Corps (CCC). built schools, parks, roads and bridges which still serve our communities today. Both the WPA and the CCC employed literally millions of people--in the 1930s. It's a model that could work very well today.

As the current recession makes clear, ending too-big-to-fail and guaranteeing a good job for everyone in our society who wants one are the two most critical structural reforms our economy needs. Don't let lawmakers forget it.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

By Raquel Brown, Media Consortium Blogger

This week the Senate Environment and Public Works Committee held three hearings on the Kerry-Boxer clean energy bill and, as David Roberts reports for Grist, Republican Senators had an "adolescent tantrum" about the cost of emission reductions. The Environmental Protection Agency (EPA), Congressional Budget Office (CBO), Energy Information Administration (EIA) and other organizations have extensively debunked this line of debate.

By Lindsay Beyerstein, Media Consortium Blogger

Progressives rejoiced when Senate Majority Leader Harry Reid announced this week that the final Senate health care bill would include a public option. The announcement was a major victory for left-wing Democrats.

Better yet, it would be a public option without a trigger. Earlier proposals called for a triggered public option which would only take effect if private insurers failed to bring down costs on their own. Under the opt-out compromise, the public option would come on line automatically (albeit not until 2013), but states would later have the option of quitting.

The jubilation was short-lived. Alex Koppelman of Salon explains:

Progressives didn't even get 24 hours to celebrate the victory they won in getting Senate Majority Leader Harry Reid to include a version of the public option in his health care reform bill. The celebration was cut off Tuesday afternoon with the news that Sen. Joe Lieberman, I-Conn., will vote with Senate Republicans to filibuster the legislation.

The Democrats have 60 Senate votes. If they all vote for cloture, a procedural motion to stop debate, the Republicans can't filibuster the bill. The Senators who vote for cloture can still vote against the bill. Reid's strategy for passing the bill was to get all Democrats to vote for cloture and let them vote their conscience on the actual bill. Even without Lieberman, Democrats have the votes to pass the bill by majority vote if they can avoid a filibuster.

Health care is the most important domestic policy initiative of the Obama administration. Would Joe Lieberman really torpedo reform? The Senate leadership thinks Reid is bluffing, according to Steve Benen at the Washington Monthly.

I understand the argument. Lieberman loves attention and power. By threatening to join the Republican filibuster, he gets both--Democrats have to scramble to make him happy, since there's no margin for error in putting together 60 votes. Lieberman gets to feel very important for the next several weeks by making this threat less than 24 hours after Harry Reid stated his intentions, but that doesn't necessarily mean he wants to be known forever as The Senator Who Killed Health Care Reform.

I find it very easy to believe, however, that Lieberman is capable of doing just that. He left himself some wiggle room, but not when it comes to the public option--he's against it, no matter what, even with all of the compromises thrown in.

In other words, if this is all a ploy for leverage, why would Lieberman open by swearing that he won't support a bill with a public option? You'd think he'd just say he was keeping his options open and force Reid to make him a counter-offer. Reid has already decided that the public option is politically non-negotiable. He's afraid that the base won't come out for the 2012 elections if they don't get what they want. Benen speculates that Lieberman wants to be the Senator Who Killed Health Care because he wants to drum up massive Republican support for his 2012 reelection bid. On this theory, Lieberman is joining Rep. Joe "You Lie!" Wilson (R-SC) and Balloon Dad in the quest to make bank on ridiculous publicity stunts.

Senator Olympia Snowe (R-Maine) says that she will side with the Republicans to filibuster the bill "if she has to," as Evan McMorris-Santoro reports for TPM. Snowe was the only Republican to vote for the Finance Committee's health care bill.

Reid must walk a fine line. The administration really can't afford to alienate organized labor before the 2012 elections. Newly elected AFL-CIO President Ricahrd Trumka continues to push for his three core demands for health care reform: a public option, a mechanism to make employers pay their fair share, and no taxes on health care benefits. Last week, AFSCME President Gerald McEntee said that his union would oppose legislation that taxed benefits, but Trumka hasn't gone that far, as David Moberg reports at Working In These Times.

Finally, in other health-related news, Occupational Safety and Health Administration (OSHA), the division of the Labor Department that oversees workplace safety, has issued a sweeping new report condemning Nevada's state-level OSHA program. As I report for Working in These Times, the investigators found that NOSHA inspectors were being pressured by their superiors to write up employers on lesser charges, even when their repeat offenses killed workers.

This post features links to the best independent, progressive reporting about health care by members of The Media Consortium. It is free to reprint. Visit the Pulse for a complete list of articles on health care reform, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

By Zach Carter, Media Consortium Blogger

Bailout pay czar Ken Feinberg raised a ruckus last week when he announced plans to slash cash payouts to executives at seven companies that have received massive levels of taxpayer support. While better oversight of the bailout barons is helpful, the best way to change Wall Street pay practices is to adopt a set of tough, comprehensive regulations that cover everything from the executive suite to the loan department. As is, many of the executives Feinberg cracked down on will still make millions this year from stocks and other perks, while the very banks that depend the most on bailout money are spending like mad to lobby against reform.

Feinberg's new salary limits only apply to executives at Citigroup, Bank of America, AIG, GM, Chrysler, GMAC and Chrysler Financial. But while these new rules are an effort to reduce the incentive for executives to take big risks for short-term gains, the rules of the game for non-bailout barons haven't changed at all. Risky securities trading and unenforced consumer protection regulations still allow financiers to make a killing by gambling on mortgages and credit cards.

As Greg Kaufmann explains for The Nation, Feinberg has been barred from altering some of the most egregious bonus arrangements at even the biggest fund recipients, as the employment contracts were signed prior to the government's bailout. AIG plans to pay out $198 million in bonuses in March 2010, and none of Feinberg's recent rulings will change that. As Kaufmann also notes, back in March, AIG agreed to pay pack $45 million of the bonuses it shelled out early this year. After over seven months, just $19 million has been repaid.

The government's hands-off approach to AIG employment contracts is a rather flagrant display of deference to executives. Nothing stopped the government from renegotiating contracts for union laborers when it bailed out Chrysler and GM, as Dean Baker notes for The American Prospect.

Lest we forget, the government literally owns AIG, and would own both Citigroup and Bank of America had it demanded a market rate of return for its investment. Taxpayers injected several times the stock market values of both Citi and BofA into the troubled banks, but settled for a 36% stake in Citi and preferred stock in BofA. As Mike Madden emphasizes for Salon, Feinberg is still letting executives make several times the median household income in cash alone--nevermind stock--and it's unlikely that his move will spark changes among bankers outside the handful of companies ordered to make changes.

"Executives are still taking home paychecks that dwarf what the average American earns. And it's not clear whether any other companies will get on board with the Treasury plan unless they're forced to," Madden writes.

Congress hasn't taken any significant steps to curb Wall Street paydays since the crisis broke, but lawmakers did take two other important steps toward banking reform this week. Two different House committees passed bills to rein in the wild world of derivatives trading and establish a new Consumer Financial Protection Agency (CFPA). In a video piece for the Huffington Post Investigative Fund, Amanda Zamora and Lagan Sebert detail the legislative battle to create a CFPA, which has faced an enormous lobbying push from both banks and the top lobby group for the corporate executive class, the U.S. Chamber of Commerce.

Zamora and Sebert note that top bank lobbyist Ed Yingling is arguing that if regulators simply enforced the existing consumer protection laws, all of the major abuses in mortgage lending and credit cards would have been prevented. Even for a corporate lobbyist, Yingling's disingenuousness is absolutely breathtaking. He acknowledges that existing regulators are not enforcing consumer protection laws, says he wants the laws enforced, and then says it would be a bad idea to create a new agency to enforce those laws.

The CFPA won't have any mysterious new powers. It will have the same authorities on credit cards and mortgages that existing federal regulators have. But the current regulators are focused primarily on bank profits, which often run directly contrary to fair play with consumers. Yingling and Wall Street are really afraid of a serious regulator who will stand up for consumers. They're terrified that the CFPA will actually enforce consumer protection rules against powerful banks--but are talking as if all they want is effective enforcement. It's a lie, pure and simple.

On Monday and Tuesday, thousands took to the streets in Chicago to protest a meeting of Yingling's lobby group, the American Bankers Association (ABA). Esther Kaplan details the protests in a piece for The Nation, complete with video footage. The ABA retaliated against Kaplan's reporting by revoking her press credentials, but it appears to have been worth it, as her piece describes everything from citizen outrage to police intimidation and awkward banker solidarity. As Democracy Now! explains, the ABA has spent decades lobbying against rules to strengthen the economy and prevent banker abuses, and is now at the heart of an effort to use taxpayer bailout money to lobby Congress against financial reforms.

So far, their efforts seem to be paying off. Last week, one of the CFPA's chief advocates, Rep. Brad Miller (D-NC), co-authored an amendment significantly restricting the agency's enforcement powers. As Sebert and Zamora note, Miller agreed to exempt banks with $10 billion or less in assets from regulatory examinations by the CFPA--roughly 98% of all banks. The existing, corrupted regulators who didn't lift a finger to prevent the subprime mortgage crisis will be the people actually going to the banks and reviewing their books. While the CFPA could send along one of its own regulators to participate in the exam, the new agency can't tax the bank to pay for it, which would make it very difficult for the CFPA to keep an eye on smaller banks.

Even worse, there is nothing to prevent a giant bank like Bank of America from moving all of its most egregiously predatory activities into a series of small corporate subsidiaries. By exploiting this loophole, 100% of U.S. banks could be exempt from CFPA enforcement, including the giant banks most heavily involved in subprime mortgage abuses.

The other big piece of Obama-backed financial legislation to make its way through Committee last week had to do with derivatives, also known as the wild Wall Street securities that brought down AIG. The best way to fix the derivatives mess is to require that derivatives be traded on an exchange the same way stocks are, so that companies can't make crazy bets without regulatory and market scrutiny. But Obama only wants "standardized" derivatives to be processed through a central clearinghouse--like an exchange, except without any public pricing information. And so long as a derivative contract can be deemed "customized," it would be totally exempt from even this limited reform.

But as Art Levine notes for AlterNet, the derivatives bill actually got worse in committee. Plenty of non-financial businesses use derivatives to legitimately hedge real risks: Airlines try to insure themselves against swings in oil prices, for instance. Lawmakers agreed to exempt any contract with these companies, termed "end-users" in the financial jargon, from central clearing requirements. The trouble is, big Wall Street hedge funds and private equity firms can be classified as "end-users," opening a fatal loophole in the legislation. The five banks who control 95% of the derivatives market will just conduct all of their most reckless trades with hedge funds and avoid oversight entirely.

A modest reform on paychecks for bailout recipients is nowhere near sufficient to protect our economy from banker excess. If Wall Street is going to serve any productive economic function, it has to be subject to serious consumer protection rules, and its derivatives casino has to be dismantled.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

By Raquel Brown, Media Consortium Blogger

After several prominent members left the Chamber of Commerce over its prehistoric climate change policies, the organization appeared to do an about-face on its climate stance during a press conference on Monday. Sound too good to be true? It was. Members of the Yes Men, a group of satirical, anti-corporate activists, posed as Chamber of Commerce officials and held a fake press conference claiming that "There is only one sound way to do business: That's to support a strong climate-change bill quickly, so that this December in Copenhagen, President Obama can lead the entire business world in ensuring our long-term prosperity." In reality, the Chamber has not changed their climate stance and continues to oppose climate change legislation. The Yes Men's stunt is just one more in a chain of hoaxes this Autumn, including a boy in a balloon, death panels on health care reform, and recent allegations that radical Islamists are using interns to infiltrate Capitol Hill.

By Lindsay Beyerstein, Media Consortium Blogger

A plan to reform health care that includes a robust public option would actually cut the deficit, according to preliminary estimates by the Congressional Budget Office (CBO). For the purposes of this analysis, a robust public option was defined as one that reimburses doctors at Medicare rates plus five percent. The latest CBO estimate is critical for Democrats because President Barack Obama said he wouldn't sign a health care bill that adds to the deficit. (There's a double standard at work. Health care has to pay for itself or save money. But as Jo Comerford notes for Democracy Now!, the president has no compunction about bloating the budget with defense spending.)

As health care reform moves into the closed-door, intra-party negotiation phase, House of Representatives Speaker Nancy Pelosi is emerging as a champion of a the public option. Pelosi has always said that she can't pass a bill without some kind of public plan, though she has wavered about how tough that plan should be on payouts to providers. But according to Brian Beutler of TPMDC, yesterday's "favorable CBO report seems to have settled all that, and Pelosi's decided to go all in for a public option."

And why not? A clear majority of Americans now favor a public option, as John Byrne reports in Raw Story. According to a Washington Post/ABC News poll published on Tuesday, 57 percent of respondents favor a public health insurance option to compete with private insurers. That's an increase of five percentage points in two months.

Two bills made it out of committee in the Senate, one with a public option (the Health Education Labor and Pensions Committee's effort) and one without (the Senate Finance bill). So, proponents of the public option are putting pressure on Senate Majority Leader Harry Reid to include one in the final bill. The Progressive Change Campaign is running ads in Reid's district asking whether he's strong enough to back a public option. Reid might be more susceptible than usual to progressive pressure because he's up for reelection and facing dismal poll numbers, according to Alex Koppelman in Salon.

The public option has come back from the abyss several times, thanks to a combination of popular appeal, political courage, and determined progressive activism. But Mike Lillis of the Washington Independent argues that Democrats shot themselves in the foot by taking single payer off the table early on. Single payer health care would abolish private health insurance and cover everyone through a Medicare-like system. It would be an easier and cheaper way to achieve universal coverage than any of the options Congress is considering now, but it's an anathema to the insurance industry.

As Lillis observes, a basic principle of negotiation is to ask for more than you think you're going to get and negotiate down from there. But the White House made a point of shooting down single payer in May and Congressional Democrats held but one hearing on the prospect. Talk about lousy business skills.

By choosing the public option -- not single payer -- as the left-most negotiating point, Democrats left themselves with few places to go but toward more conservative proposals for insurance reform, experts say, including the co-op model and a system of triggering public plans only if private insurers fail to meet certain cost and coverage targets. In the blood sport of congressional negotiating -- which dictates that you over-ask, and then move toward your goal during the subsequent bartering -- Democrats were asking merely for the public plan they wanted in the final bill.

While we're on the subject of preemptive concessions to unreasonable political parties, Amanda Marcotte of RH Reality Check describes how Democrats have bent over backwards to accommodate the anti-choice lobby on funding abortions under a public plan. Democrats have proposed elaborate bureaucratic workarounds to make sure that abortions are only covered by private money. Still, anti-choice militants like Michelle Bachmann (R-Minn) are accusing them of backing abortion fieldtrips for school kids. Speaking of starting high and negotiating downward, Dems should threaten to overturn the Hyde Amendment, which bans the use of federal funds for most abortions. Let's see what the anti-choicers are prepared to give up in exchange.

In a sense, it's reassuring that legislators are taking the public option seriously enough to argue about how it might pay for abortions. If they didn't think we were going to get a public option, it would be a moot point.

This post features links to the best independent, progressive reporting about health care by members of The Media Consortium. It is free to reprint. Visit the Pulse for a complete list of articles on health care reform, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Audit, The Mulch, and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

By Raquel Brown, Media Consortium Blogger

The U.S. might not have to go to December's climate change talks in Copenhagen empty handed. Two weeks after Senators John Kerry (D-MA) and Barbara Boxer (D-CA) unveiled a new draft of the climate change bill, Kerry and Sen. Lindsey Graham (R-SC) announced their bipartisan partnership to pass climate change legislation in an op-ed for the New York Times.  By working together, the two hope to appeal to their respective party's interests and help the climate change bill get 60 votes in the Senate.