Depressing if True

William Greider, writing for The Nation, seems to think that while Republicans have certainly done their best to demonize Elizabeth Warren, there are folks surrounding President Barack Obama who also don't want this candid woman to chair the Consumer Financial Protection Bureau. Greider's information relies on a Very Reliable Source, unnamed, so who can really tell how accurate this is. But based on what I've read about the financial industry and how all those finance guys seem to end up in positions of power around the presidency (including Obama's), I wouldn't be surprised. Here's a quote from Greider:

Tim Geithner, said my Very Reliable Source, really, really doesn’t want Elizabeth Warren in the position where she is sure to be a tough-minded and independent voice on major financial-policy issues. As CFPB director, Warren would also sit on the new “systemic risk” council of regulators who decide very large questions like “too big to fail.” The other regulators can outvote her easily enough, but Warren has an alarming history of personal candor. She says what she thinks, out loud and in public. That naturally disturbs the club members, all of whom have a rank history of making life easier for the big boys of banking.

Warren made her integrity clear when she served as chair of the Congressional Oversight Panel digging into the financial crisis and bailouts. Her investigations turned up alarming facts the bankers and bank regulators wished to avoid. Furthermore, Warren was often dissenting on legislative issues Geithner and team were pushing in the congressional debates on financial reform. Geithner doesn’t tolerate contrary thinkers in his midst; witness the galaxy of Wall Streeters he recruited to run the Treasury department. Geithner is a favorite of the president’s, perhaps because he is absolutely faithful to the financial establishment’s best interests. [William Greider, "Why is Obama Dragging his Heels on Appointing Elizabeth Warren to head CPFB?," The Nation, 27 May 2011.]

I don't know the answer to the question in the title of Greider's article, and I'm no expert. But I've read enough about the economic crisis to know that we can't blame just one political party for all the deregulation that eventually led to the risks that the financial industry took and the financial crisis that ensued. Those at the top seem to cover each other's backs very well. Just sayin'.

David Corn, an editor for Mother Jones and a former editor of The Nation, described the distance between Timothy Geithner and Elizabeth Warren in this article on HuffPost's "Politics Daily," in 2010. Here is a quote from Corn's article: "Elizabeth Warren Vs. Timothy Geithner: A Big Decision for Obama."

As head of the bailout oversight panel, Warren has fiercely called out Geithner and Treasury on a number of fronts: for providing a backdoor bailout to AIG, for botching homeowner relief programs, for failing to get mega-banks to resume lending. Moreover, she's an articulate and thoughtful populist, who applies a Main Street-first perspective toward financial matters and who has been a scourge of credit card companies and banks. Geithner is a member of the Big Finance establishment; he's no crusader.

It would be nice to have an "articulate and thoughtful populist" on one's side.

No Consequences for Bad Behavior; Little Regulation to Prevent It

For a long time I have been thinking--almost brooding--over the global financial crisis. Before 2007, I hadn't thought much about Wall Street though I had read my share of news articles over the years about the power of Wall Street and was passingly concerned about the influence of that power over our elected officials. With the financial meltdown in 2008, however, I began paying much more attention to financial and economic news. Nothing in my background--poet, teacher of literature and writing, gardener, art car enthusiast--prepared me for such an interest. I certainly knew nothing about derivatives. But the financial meltdown has enough sturm und drang for any engaging narrative of greed and corruption, tragedy and despair. And when the narrative touches one's own life, well, it does make one sit up and pay attention, doesn't it?

After reading numerous articles and blog posts about the crisis, after watching PBS Frontline specials and Charles Ferguson's documentary Inside Job (now available through Netflix), I think I can say with some confidence that the rats who almost blew up the world as we know it are still on the ship. Nor have they been caught and brought to trial and punished for their bad behavior. Nope. Some are at the helm of the ship. Others are cocooned on islands of privilege and are enjoying their millions.

Meanwhile, millions of Americans have been laid off, are out of work, can't find work, have lost their homes, are in danger of losing their homes, can't afford a college education or to pursue their dreams of owning a business. Ordinary Americans have bailed out the banks and the bastards who brought us to the brink--yet our elected leaders are trying to cut the very benefits that would prevent many Americans from suffering an impoverished and miserable old age. We can afford to save Goldman Sachs and Fannie Mae but not Medicare or Medicaid. We can regulate a woman's uterus but not the financial market.

Today, in The Washington Post, Ezra Klein points out that "though the financial crisis remains lodged in our minds, and in our jobless rates," our elected officials are not confirming leaders to help regulate the financial institutions that caused the crisis:

... [T]he Federal Reserve lacks a vice chairman for banking supervision. There’s no one officially in charge of the Treasury Department’s Office of Financial Research. The seat marked “insurance” on Financial Stability Oversight Council is empty. The Consumer Financial Protection Bureau has a leader but not a director. No one has been confirmed to head the Office of the Comptroller of the Currency. And Republicans are still saying Nobel Prize-winning economist Peter Diamond is underqualified to serve on the Federal Reserve’s Board of Governors." "If it can go wrong, it will go wrong. And it'll be our fault," The Washington Post, 24 May 2011.

And, in their over-the-cliff plans to cut the deficit, "the House GOP is fighting to starve financial regulators of the resources they need to do their work." As Klein points out, we have a deficit because of the financial crisis, and we have a financial crisis because of a lack of regulation, and we're not funding regulation because we have a deficit. See some circular reasoning on the part of our leaders?

How to respond to such idiocy? With cynicism, says Kevin Drum (well, actually, he says the situation overwhelms his own cynicism):

It's this, more than anything else, that has convinced me over the past couple of years that America's wealthy class is simply morally bankrupt and that the leadership of the Republican Party is politically bankrupt. Five years ago I would have been embarrassed to write a blog post suggesting that this might be the reaction of the moneyed class to an economic collapse. Then we had one and this was the reaction. Once again, events have outrun my best efforts to be cynical.

It's certainly with cynicism that I listened to Dave Davies interview Gretchen Morgenson on NPR's Fresh Air today. Morgenson, who writes about finance for The New York Times, has just published a book she co-wrote with Joshua Rosner: Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon. In this book, Morgenson "focuses on the managers of Fannie Mae, the government supported mortgage giant." Like the later financial players of Wall Street--Morgan Stanley, Goldman Sachs, et alia--the managers of Fannie Mae pursued deals that enriched them and that weakened regulatory oversight. But lest listeners think these details support the Republican narrative that the financial crisis was all due to mortgage defaults, to the government's "meddling in the market" in its determination to "push home ownership" to people who couldn't afford it, Morgenson adds that "Wall Street was not a passive player." Had regulators done their due diligence, had there been rigorous oversight, we would not be in the economic situation that we're in now.

And it's certainly with cynicism that I read today that the Tea-Party backed candidates who were elected because of the anger people felt toward the bailouts and Wall Street shenanigans "are now pushing pro-Wall Street legislation" and that "[t]he 10 Republican freshmen on the House Financial Services Committee have taken in nearly $600,000 from the financial industry since Election Day, according to the Sunlight Foundation." ["Tea-Partiers Swept in on Anti-Wall Street Wave Now Pushing Deregulation," Ryan J. Reilly, TPMMuckraker, 24 May 2011.]

To maintain that realistic and appropriate level of cynicism, I am creating here a list of articles to read (or re-read) and documentaries to view (or re-view) on the financial crisis, on who took us there (a bipartisan ride), who abandoned us, who profited, who suffered, and why it's probably gonna happen again. (in no particular order except that I'm working backward from today and jumping around locating articles I remember reading and identifying others I haven't read but which look promising)

• Marian Wang, "Cheat Sheet on Bank Investigations and the Probes that have Petered Out," ProPublica: Journalism in the Public Interest, 24 May 2011.
• Matt Taibbi, "The People versus Goldman Sachs," Rolling Stone, 11 May 2011.
• Matt Taibbi, "The Great American Bubble Machine," Rolling Stone 5 April 2010.
• Brian Beutler, "One-Time Warren Foe Now Pressuring Obama to Give Her Recess Appointment to Head Consumer Bureau," TPMDC 23 May 2011.
• Ben Protess, "Warren and Republicans Spar Over Bureau's Power," DealBook, in The New York Times, 24 May 2011.
• Katrina vanden Heuvel, "Why Obama Should Appoint Elizabeth Warren,", in The Washington Post, 24 May 2011.
• The Reckoning--a series of articles published in The New York Times that "explored the causes of the financial crisis of 2008." The series includes these articles, among others: Peter S. Goodman and Gretchen Morgenson, "Saying Yes, WaMu Built Empire on Shaky Loans," 28 December 2008; Jo Becker, Sheryl Gay Stolberg, and Stephen Labaton, "White House Philosophy Stoked Mortgage Bonfire," 21 December 2008; Louise Story, "On Wall Street, Bonuses, not Profits, were Real," 18 December 2008; Eric Lipton and Raymond Hernandez, "A Champion of Wall Street Reaps Benefits," 14 December 2008; Peter S. Goodman, "Taking a Hard New Look at Greenspan Legacy," 9 October 2008.
• Jesse Eisinger and Jake Bernstein, "The Magnetar Trade: How One Hedge Fund Helped Keep the Housing Bubble Going," ProPublica, 9 April 2010.
• Jake Bernstein and Jesse Eisinger, "The 'Subsidy': How Merrill Lynch Traders Helped Blow up Their Own Firm," ProPublica 22 December 2010.--Or read the series of ProPublica's investigative articles on the financial crisis here: "The Wall Street Money Machine."
• Oh, and this little post is sort of funny: Did Porn Cause the Financial Crisis?", posted 23 April 2010, by Daniel Indiviglio, associate editor at The Atlantic.
• Jack Dolan, Rob Barry, Matthew Haggman, "Borrowers Betrayed," Miami Herald, 2009--series on the Florida mortgage industry and the lack of regulation oversight that led to criminals being granted state licenses.
• Dean Starkman, of Columbia Journalism Review provides a list of worthy articles on the financial crisis: "No Pulitzers, But Here's an Audie", posted 21 April 2009.
• "The Warning," a Frontline report on Brooksley Born, head of the Commodity Futures Trading Commission during the Clinton administration, who tried to warn the economic power-brokers of the potential for economic meltdown if the derivatives market was not regulated. As of this writing, the full video can be watched online. DVDs are also available for purchase from PBS.(air date, 20 October 2009)
• Frontline's "Inside the Meltdown," first aired on 17 February 2009, at this writing, can be viewed entirely online on the PBS website. Or just go to the webpage that includes links to all the Frontline videos that are available online: "Watch Frontline Online".
• Michael Lewis, "Wall Street on the Tundra," Vanity Fair, April 2009--Unfortunately, this article is no longer fully available on Vanity Fair's website, but I found a .pdf version elsewhere, "Wall Street on the Tundra", that might still be accessible. This is the article that really got me interested in the details of the financial crisis. I remember reading it shortly after it was published online.
• Kevin Hall, "Mortgage Crisis Shows Why Financial Regulation is Needed", McClatchy, 1 November 2009. And you can see all the stories and videos that resulted from McClatchy's five-month investigation into Goldman Sachs here: McClatchy Newspapers, investigation into Goldman Sach's contributions to the economic crisis.
• Paul Solman interviews Charles Ferguson, director of Inside Job. In the interview, Ferguson talks about undisclosed ties and conflicts of interest in the financial relationships between academics in economics departments and the financial sector.

This is a short list of all one can find on the economic crisis online. I didn't include articles from The Wall Street Journal because I'm not a subscriber and am therefore unable to access them. Most of the sources on this list are not locked behind a subscription wall--except for, perhaps, The New York Times articles--because I do subscribe to the online version of The New York Times.

--so little time, so many opportunities for corruption.....