Author: Matt Browner Hamlin

http://holdfastblog.com

Stoller: What Democrats can do about Obama

Matt Stoller in Salon:

Obama has ruined the Democratic Party.
…
So why isn’t there a legitimate primary challenger to Obama to make this case? Forty years ago, primaries were instituted in the Democratic Party as a response to party insiders having too much influence over nominations. These reforms were implemented before the prevalence of money in politics was as extreme as it is now. At this point, primary challenges are so expensive that a serious 2012 campaign would ironically require support of party insiders for viability. The party, inflexible as it was in 1968, is perhaps even more rigid today. As a result, no candidate has stepped up to challenge Obama in a primary, even though 32 percent of Democratic voters want one.

This is an institutional crisis for Democrats. The groups that fund and organize the party — an uneasy alliance of financiers, conservative technology interests, the telecommunications industry, healthcare industries, labor unions, feminists, elite foundations, African-American church networks, academic elites, liberals at groups like MoveOn, the ACLU and the blogosphere — are frustrated, but not one of them has broken from the pack. In remaining silent, they give their assent to the right-wing policy framework that first George W. Bush, and now Barack Obama, cemented in place. It will be nearly impossible to dislodge such a framework without starting within the Democratic Party itself.

Stoller’s emphasis on the role party insiders can play in taking action here is insightful. There is no need for acquiescence. Stoller suggests first that party leaders run as favored son candidates, sparking energy and discussion in different geographies that opens the door for a real discussion about the direction the base wants the party to go in and who we want to lead us there:

Harkin could run as a “favorite son” of Iowa, and encourage people in the caucuses to send a message to the party and to Obama by choosing him. Other candidates could then emerge in early primary and caucus states, as a way of repudiating Obama’s leadership. Candidates wouldn’t have to pretend to be running for president or be presidential quality; they could simply stand in as favorite sons or daughters of their own geographic area. This would immediately fire up a highly aggressive and needed debate about the direction of the Democratic Party and the country at large. It would build a new set of leaders, and elevate others who would like to distance themselves from the Obama policy agenda.

In a few months, we’ll know better if Obama still looks like a loser next year. If he does, that does not mean the Democratic Party must follow him down the path to oblivion.

He concludes:

Political parties need to be flexible enough to allow for new ideas to come into the process, or else third parties or civil disorder are inevitable. All it would take to provide this flexibility are well-known Democratic elders who understand that rank and file Democrats deserve a choice, and a few political insiders who realize that they can increase their own power by encouraging a robust debate. I don’t think this will happen. But just imagine if it did.

I think this is exactly right. I’m really not afraid of the consequences of a primary. I don’t think something that 32% of Democratic voters want is fringe – it’s a legitimate idea, and one has achieved that legitimacy without a single party insider, media figure, or liberal leader advocating for it. If a primary challenger were able to emerge and beat Obama from the left, that person would offer voters a real choice of vision for how to right the economy and rebuild the middle class. If primary challengers emerged, but failed to knock Obama off of the top of the ticket, then at least the base had a choice in opposition and made it with their vote.

One element Stoller doesn’t address is that Obama’s poll numbers are weak now. There’s a very real chance that no only will he have taken the Democratic Party far to the right, but that he’s not even going to win reelection, ensuring four to eight years of Republican rule (which may well be similar to what we have, but without the whimsy). But there is recent history of the Democratic Party forcing an incumbent to not run for reelection due to poor polling: the 2010 Senate race in Connecticut, where poor polling lead the administration and party leadership to not only encourage Chris Dodd to not run again, but were recruiting an alternative candidate while Dodd was still running. Dodd did what was probably best for the party and stepped down in a timely fashion and Democrats were able to hold the seat. While there may or may not emerge primary challengers to Obama, there also may need to be a discussion not about his candidacy on ideological grounds, but his candidacy on electability grounds. I don’t expect that there will be this degree of critical introspection within the administration, but if there ways, very interesting things could happen that might not otherwise be possible.

WaPo ed board dishonestly attacks Schneiderman

The conservative Washington Post editorial board has weighed in on the settlement talks between banks and fifty forty-six state attorneys general around robosigning. Oddly the WaPo blames New York Attorney General Eric Schneiderman for the foreclosure crisis, because he wants to investigate what is happening and prosecute any illegal actions by the banks. The WaPo ed board basically wants a quick settlement so they can move on with as little damage to banks as possible (undisclosed coincidence: Warren Buffett owns a big piece of the Washington Post, as well as Bank of America and Wells Fargo).

But beyond the usual dishonesty that goes along with any pro-banker screed around foreclosure and securitization fraud, the Post’s editorial board just makes up a few facts in their attack on Schneiderman:

The majority of the other attorneys general, led by Tom Miller of Iowa, have kicked Mr. Schneiderman out of the negotiations, accusing him of making excessive demands. Mr. Schneiderman protests that the banks are to blame, for trying to use the robo-signing case to get immunity they could use on the securities front. Mr. Miller and his colleagues respond that they have no intention of letting the banks off that particular hook.

First, Miller kicked Schneiderman off of the executive committee unilaterally. There was no vote of other AGs, at least according to, ahem, the Washington Post.

Second, and more importantly, Miller is offering the banks a release around securitization fraud. Shahien Nasiripour at the Financial Times reported on Monday night:

State prosecutors have proposed effectively releasing the companies from legal liability for allegedly wrongful securitisation practices, according to five people with direct knowledge of the discussions.

As we’ve seen before, when the banks send their allies out to attack Eric Schneiderman, there is little regard to the truth.

A Republican insider takes on both parties

Via John Aravosis, this piece at Truthout by Mike Lofgren, a thirty year veteran Republican staffer, is an interesting read. Lofgren claims he resigned recently after watching the GOP get taken over by lunatics (his word) like Michele Bachmann, Allen West, Patrick McHenry and Steve King.

This passage stands out:

A couple of years ago, a Republican committee staff director told me candidly (and proudly) what the method was to all this obstruction and disruption. Should Republicans succeed in obstructing the Senate from doing its job, it would further lower Congress’s generic favorability rating among the American people. By sabotaging the reputation of an institution of government, the party that is programmatically against government would come out the relative winner.

Lofgren astutely notes the media’s complicity in this sabotage, through the devolution of journalism from a noble profession practiced by talented individuals to a medium defined by false equivalencies and “he said, she said” reporting.

While Lofgren’s critique of his own party is devastating, his analysis of the failings of the modern Democratic Party is also insightful.

What do the Democrats offer these people? Essentially nothing. Democratic Leadership Council-style “centrist” Democrats were among the biggest promoters of disastrous trade deals in the 1990s that outsourced jobs abroad: NAFTA, World Trade Organization, permanent most-favored-nation status for China. At the same time, the identity politics/lifestyle wing of the Democratic Party was seen as a too illegal immigrant-friendly by downscaled and outsourced whites.

While Democrats temporized, or even dismissed the fears of the white working class as racist or nativist, Republicans went to work. To be sure, the business wing of the Republican Party consists of the most energetic outsourcers, wage cutters and hirers of sub-minimum wage immigrant labor to be found anywhere on the globe. But the faux-populist wing of the party, knowing the mental compartmentalization that occurs in most low-information voters, played on the fears of that same white working class to focus their anger on scapegoats that do no damage to corporations’ bottom lines: instead of raising the minimum wage, let’s build a wall on the Southern border (then hire a defense contractor to incompetently manage it). Instead of predatory bankers, it’s evil Muslims. Or evil gays. Or evil abortionists.

How do they manage to do this? Because Democrats ceded the field. Above all, they do not understand language. Their initiatives are posed in impenetrable policy-speak: the Patient Protection and Affordable Care Act. The what? – can anyone even remember it? No wonder the pejorative “Obamacare” won out. Contrast that with the Republicans’ Patriot Act. You’re a patriot, aren’t you? Does anyone at the GED level have a clue what a Stimulus Bill is supposed to be? Why didn’t the White House call it the Jobs Bill and keep pounding on that theme?

You know that Social Security and Medicare are in jeopardy when even Democrats refer to them as entitlements. “Entitlement” has a negative sound in colloquial English: somebody who is “entitled” selfishly claims something he doesn’t really deserve. Why not call them “earned benefits,” which is what they are because we all contribute payroll taxes to fund them? That would never occur to the Democrats. Republicans don’t make that mistake; they are relentlessly on message: it is never the “estate tax,” it is the “death tax.

Lofgren actually mistakes inept messaging with desired political outcomes, while simultaneously missing the real point of the DLC-made Democratic Party’s free trade policies. Give voters too much passion from the government as a source of job creation and health care, and they’re bound to want more. But that’s not what the corporatists in the right of the Democratic Party want, so they don’t push for it. Obama and many conservative Democrats are pushing for cuts to the Big Three social support programs. They don’t want there to be an estate tax, because they don ‘t want their rich donors to be taxed. So when Lofgren writes, “The GOP cares solely and exclusively about its rich contributors,” it’s also the case that the same could be said for many, many conservative Democrats.

Lofgren’s piece shows him as someone who is outraged by what is happening in an America where one of two political parties is hell-bent on destroying government. But his analysis of the other party is centered around political cravenness, giving no real attention to the rightward shift of controlling Democratic ideology. In the end the problems don’t necessarily arise from one party dashing to the right, but the other moving along with it. In that sense, no choice is preserved for voters and thus the people who make the move to shift to the frame of acceptable debate are the ones who win out over time.

Lofgren spent 28 years working on at the House and Senate Budget Committees. I’m sure he has seen an evolution in how the Democratic Party operated and how the increased influence of first the DLC and then Third Way shifted the Democrats to the right, while a similar shift was ongoing in his party. It would be interesting to see him write about that narrative, now that he’s established himself as a smart, credible critic of government and politics in the 21st century.

FHFA To Sue Big Banks for Investment Putbacks

The New York Times is reporting that the FHFA, the agency which oversees Fannie Mae and Freddie Mac, is planning on suing twelve major banks today or Tuesday, accusing the banks of “misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble.”

The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value.

Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers.

Until the suit is filed, we won’t know exactly how much money FHFA is seeking to get from the banks. This move is in a similar mold to other efforts to putback loses onto the banks, thereby reducing the liabilities  incurred by Fannie and Freddie. FHFA administrator Ed DeMarco, a holdover from the Bush administration, has pursued this strategy for a while now. The statute of limitations on filing this sort of securitization lawsuit expires this coming Wednesday, so there’s some sense that this is happening now to get any action in under the wire.

The banks and their surrogates are trotting out the idea that Fannie and Freddie are sophisticated investors, who should have been able to tell that things Standard & Poors rated as AAA were not in fact anywhere near AAA quality investments.  I’m not clear how well the, “They should have known we were peddling junk and were just paying ratings agencies to say it wasn’t” defense will play out in court. The problems with securitization go far beyond what the Times describes, with many of these securities put together while the underlying loans were already delinquent, in foreclosure, in bankruptcy or already owned by the banks. Hopefully FHFA comes out with big numbers in their lawsuit that adequately reflect the scale of the securities fraud committed by these banks and seek restoration, as well as punishment, for this fraud.

Banks still fabricating documents in foreclosure fraud

For those not paying close attention to this issue already, it may be news to you that despite being outed a year ago for using the practice of robosigning to fabricate thousands of documents used to foreclose on homeowners, banks are still using this practice today. American Banker:

Some of the largest mortgage servicers are still fabricating documents that should have been signed years ago and submitting them as evidence to foreclose on homeowners.

The practice continues nearly a year after the companies were caught cutting corners in the robo-signing scandal and about six months after the industry began negotiating a settlement with state attorneys general investigating loan-servicing abuses.

Several dozen documents reviewed by American Banker show that as recently as August some of the largest U.S. banks, including Bank of America Corp., Wells Fargo & Co., Ally Financial Inc., and OneWest Financial Inc., were essentially backdating paperwork necessary to support their right to foreclose.

Some of documents reviewed by American Banker included signatures by current bank employees claiming to represent lenders that no longer exist.

David Dayen explains what this means:

And you see, the banks HAVE to fabricate documents. Because they destroyed the private property system through improper and sloppy securitizations and lost or missing mortgage assignments during the bubble years, and as such they cannot prove standing to foreclose without lying. Robo-signing is a crime, but it’s also a cover-up for a much bigger crime, which involves MERS and improper mortgage transfer and securities fraud. The robo-signed, forged, fabricated documents are the smokescreen being used to foreclose and get the real problem off the books. Banks are trying to wriggle off the hook by saying they are merely “memorializing” past actions with the fake documents. Some courts aren’t buying it; the pooling and servicing agreements stipulate that all assignments showing transfers must take place within 60 days, not years later through “memorialized” actions.

What this really comes down to is that making a settlement with banks around robosigning now, while there has been no real investigation by the state law enforcement officials who are negotiating a settlement and while the practice is continuing as the negotiations go on, is dangerous and premature. The banks can’t possibly be negotiating in good faith with Tom Miller and the other state AGs because they’re still committing the crimes they want to be released from prosecution for!

There’s a massive criminal scheme being revealed by the press and a handful of diligent public officials like Attorneys General Eric Schneiderman, Catherine Cortez Masto and Beau Biden, as well as county Registers of Deeds like Jeff Thigpen in North Carolina and John O’Brien in Massachusetts. These officials seem committed to pursuing investigation and accountability. It’s time their peers get on board.

S&P Still Giving Subprime RMBS AAA Ratings

Remind me why S&P is still allowed to exist? Bloomberg:

Standard & Poor’s is giving a higher rating to securities backed by subprime home loans, the same type of investments that led to the worst financial crisis since the Great Depression, than it assigns the U.S. government.

S&P is poised to provide AAA grades to 59 percent of Springleaf Mortgage Loan Trust 2011-1, a set of bonds tied to $497 million lent to homeowners with below-average credit scores and almost no equity in their properties. New York-based S&P stripped the U.S. of its top rank on Aug. 5, saying Washington politics were making the country less creditworthy.

Leave Tom Miller Alone!!!!

Originally posted at AMERICAblog

We are finally seeing righteous indignation is within the 50 state attorneys general settlement talks:

Another person close to the talks, who like several others spoke on the condition of anonymity to discuss the situation more freely, said many in the group are “just exasperated. . . . This smear campaign of lies and innuendo, it’s uncalled for, it’s unprecedented, and it threatens substantial consumer harm.”

If you think this referred to the smears being launched by Wall Street and the Obama administration at NY AG Eric Schneiderman, you’d probably agree with it. But you’d be wrong. Apparently the push by Schneiderman, Beau Biden, Catherine Cortez Masto and other allies for a deal which doesn’t shut down their ability to investigate foreclosure and securities fraud is hurting Iowa AG Tom Miller’s fee-fees.

“We’ve been accused of being in bed with the banks. To say that to a group of people who have spent the last seven to 10 years fighting mortgage abuses day in and day out is an insult of the highest order,” said Iowa Assistant Attorney General Patrick Madigan, a longtime Miller deputy, who has worked on major settlements with subprime lenders such as Countrywide and Ameriquest. “It’s just unreal.”

I guess Miller’s office has a real problem when the entire New York Democratic congressional delegation chides him for tossing Schneiderman out of the talk’s executive committee. Instead of responding to Jerrold Nadler et alia, Miller is running to the press to complain about his unilateral, pro-bank actions coming under scrutiny.

The reason Miller is being accused of being in bed with banks is because that’s what you call it when you raise more than $250,000 from the finance industry right after announcing that you’re leading a 50 state investigation into that same industry. It happens when you then shift from guaranteeing to “put people in jail,” to producing a settlement term sheet before you even sat down to negotiate with the banks. It happens when you kick the individual who has done more to ensure that there is actually investigation before a settlement off the executive committee for having the temerity to try to get the best deal possible. If Tom Miller’s office doesn’t like being accused of being in bed with banks, he should get out of the bed and start investigating the banks.

Stoller on Schneiderman & Obama

Matt Stoller has been consistently writing thoughtful analysis about the Obama administration and what’s happening in American political life, but this piece at Naked Capitalism is undoubtedly one of his sharpest pieces of writing, pulling together a number of different threads of analysis around what we’re seeing out of New York’s Attorney General, Eric Schneiderman. Stoller pushes the analysis (bold in its rarity) that Schneiderman, like Obama and any other politician, is doing what he wants to do.

In all the absurdly stupid punditry, the simple application of free will to our elected officials goes missing. Yeah, Obama got money from Wall Street. But Obama is choosing to pursue a policy of foreclosures and bank bailouts not because of any grand corporate scheme. He just wants to. He thinks it’s the right thing to do, and he’s doing it. If you don’t think it’s the right thing to do, then you shouldn’t be disappointed in him any more than you might have been disappointed in Bush. Obama is not trying to do the opposite of what he’s doing, he’s not repeatedly suckered by Republicans, and he isn’t naive or stupid. Obama is simply doing what he thinks is right. So is Eric Schneiderman. So is Tom Miller. So are any number of elected officials out there.

In positions of power, the best expression I heard is that “up there the air is thin”. That is, you have enormous latitude, if you want to use it. Power can be wielded creatively and effectively on behalf of whatever it is the wielder wants. Now of course there are constraints, plenty of them. Smart politicians spend their time working to maximize the constraints they want to impose and weakening the ones they want to overcome. But the basic Reaganite liberal argument defending supplication towards Obama these days is that Obama is “disappointing”. In this line of thought, powerful corporate interests and Republicans are preventing him from enacting what his real agenda would be were he unfettered by this mean machine. Eric Schneiderman, who is in a far less powerful position as New York Attorney General, shows that this is utter hogwash. Obama is who he is, and anyone who thinks otherwise is selling something.

The rest of the piece is really sharp and definitely worth reading. There aren’t many people consistently putting out clear-minded analysis of the Obama administration and political dynamics in America today, but Matt is one of them.

Draft Duncan Black

Duncan Black:

I understand the difficulties of getting things done, of Republican obstructionism, of Democrats who also, too, suck, but ultimately such excuses don’t matter. Results do. If I were the one in charge of this pop stand, I’d direct my economics team to come up with the “If I were a prime minister instead of a president, this is what we would do” plan. And if all they came up with was minor tax breaks for hiring, “patent reform,” and “trade deals,” I’d, you know, fire them.

That would be great, if Duncan were in charge. But he isn’t. Unless this is Duncan raising a trial balloon for him to be drafted as a presidential candidate, I’m not sure what the point is. Barack Obama wants “minor tax breaks for hiring, “patent reform,” and “trade deals” so he isn’t going to fire the people who bring him these ideas.

Government isn’t broken

In an op-ed in the Nashua Telegraph, Daniel Weeks writes:

Our problem today is not a broken government but a beholden one: government is more beholden to special-interest shareholders who fund campaigns than it is to ordinary voters. Like any sound investor, the funders seek nothing more and nothing less than a handsome return – deficits be darned – in the form of tax breaks, subsidies and government contracts.

This is pretty much what I’ve been saying for a long time now. The same thing could be said about the economy as well as the government.