Faith & Social Justice: In the spirit of Richard Overton and the 17th C. Levellers

Geithner’s Plan for New Financial “Oversight”

UPDATE: It’s hard to tell whether the criticism of Geithner is fiercer on the Right or Left.  I’ll concentrate on the Left because it shows clearly that Democrats are not robots who blindly follow presidential leadership:  David Sirota of the Center for American Progress (CAP) is saying  that whether Geithner is lying or just incompetent, he needs to be fired.  Chris Bower of Open Left outlines how the AIG mess was CAUSED by the incompetence of Geithner’s bank plan.

If Geithner gets fired (I hope), I hope Obama will appoint a more progressive economist as Treasury Secretary: Robert Reich, Joseph Stiglitz, Dean Baker. It would be too much to hope for Paul Krugman.  Could we get rid of Chief Economic Advisor Larry Summers (who was responsible for much of the deregulation) while we are at it? 

I am no fan of Sec. of the Treasury Timothy Geithner.  I was against his appointment from the beginning, not because of his  tax problems (minor and common among Americans working for international organizations, as he did), but because as New York’s reserve board chair, he should have worked to PREVENT much of the financial slide.  (I was glad that Larry Summers, who helped deregulate during the Clinton years, didn’t get Treasury Sec., but then  he was made head of the WH Council of Economic Advisors–ugh!) Geithner was someone I considered part of the problem.

Now, I haven’t been 100% right on my calls on Obama appointments. So far, Hillary Clinton is proving to be a much better Secretary of State than I expected. It’s early, yet, but she seems to be advancing tough, pragmatic, diplomacy that is mostly aimed at a more just and peaceful world. She’s even dared to offer (mild) criticism to Israel, which is almost unheard of by U.S. diplomats and politicians.  My only complaint was her soft-pedaling China’s horrid human rights record.  And, to my DEEP surprise, Bush Appointee Gates is proving to be a team player as Secretary of Defense instead of trying to undermine Obama’s plans on Iraq, Gitmo,  and much else. (I have complaints about the Obama team on these issues, but they aren’t due to Gates–to my surprise.)  Ken Salazar looks like he is doing a fair clean up job as Sec. of Interior (although I still think  Rep. Raul Grijalva (D-AZ) would have been better) and, so far, Tom Vilsack has not sold us all out to Big Agribusiness as Sec. of Agriculture.   All this could change, but each of these appointments have surprised  me for the better.

But I seem to have been right on the money about Geithner (pardon the pun). He has protected the zombie banks instead of nationalizing them, cleaning out their toxic assets and re-privatizing them–after sending to the Justice Department the evidence from their books of fraud and other financial crimes.  His timidity has prevented the bold action necessary for full  economic recovery–and he and Summers are keeping Pres. Obama in a bubble where he doesn’t hear from the bolder economists like Joseph Stiglitz, Paul Krugman, Dean Baker, Robert Reich,  etc.

So, I was suspicious of Obama’s claim that Geithner would unveil “bold plans” for new financial sector oversight. I remembered the last Geithner “unveiling” and shuddered.  But,  if the Wall Street Journal is right (and their reporters are usually good, despite the hugely rightwing bias of their editorial pages), then I have to say I am pleasantly surprised.  This may not be enough, but Geithner’s plans seem like steps in the right direction.  According to the WSJ, Geithner’s plan would:

  • Insist on consistent enforcement of consumer protection laws regarding mortgages and credit cards. (This is not detailed enough. Congress should enact STRONGER protections such as interest rate  caps.)
  • Expanding the power of the Federal Reserve to spot and intervene in systemic risk (e.g., huge bets by banks on mortgages). These powers need to be spelled out clearly. Another aspect is the monitoring of the system which allows banks to borrow from each other–a system which, when clogged, blocks liquidity.  Geithner’s plan is vague about the type of oversight on hedge funds.  He is trying to coordinate financial regulation with international partners, but Europe rightly wants FAR MORE oversight on hedge funds.
  • Creation of a clearinghouse to monitor and regulate derivatives–the crap that led to our current meltdown.
  • Require banks  to keep more capital on hand during good times so that, when markets go bad, they have the cash to weather the storms.
  • Ask Congress to give  govt. the power to take over any institution about to fail whose failure would  threaten the stability of the market. Hmm. O.K., but why not use anti-trust laws to keep institutions from BECOMING “too big to fail,” breaking them up.  I’d want laws to make it more difficult for big banks to eat smaller ones. I’d like this “stepping in” authority to reside with the Federal Deposit Insurance Corporation (FDIC) rather than the Federal Reserve.

The article didn’t mention any new rules on bonuses or executive compensation.  I think Congress  should look at the WAY financial execs are paid: cancelling the way that traders get paid for deals completed whether they do well or poorly. The whole bonus culture needs to be attacked, especially since it is not performance based. If we are about to demand “merit pay” for public school teachers,  surely we should for bankers.

The article also didn’t talk about restoring the barrier between investment banks and ordinary deposit banks–the barrier removed by the repeal of Glass Steagall (that Clinton should have vetoed). Such a barrier limits damage if their is a financial sector crisis.

Again, this is not enough. But it is better than I expected to come from Geithner.  Now economic populists in Congress need to build on this to get deeper reforms.  We need to end “bubble economies.”


March 17, 2009 Posted by | economic justice | 1 Comment

Poll: More Americans Now Against Afghanistan War

Well, THIS NEWS is sooner than I expected.  I didn’t expect to see this much support for ending the Afghanistan war until next year.  UPDATE: I have changed the title because I read the poll too quickly.  The poll says that 42% of the people now think  going INTO Afghanistan was a mistake.  This surprises me even more.  The poll doesn’t ask how we get out or what to do, now. It’s not a perfect poll.

But I think this rules out the Petraeus model of counterinsurgency.  That model expects us to be in Afghanistan for at least 8 more years, increase  troop levels to 600-700,000.  But that is politically and economically IMPOSSIBLE.  If you try to get those kind of troop levels without a draft, you are pulling troops out from the DMZ between North and South Korea and other other geopolitically sensitive places.  What if we had another Katrina-style disaster without, once again, enough National Guard troops available?  The other way to get those kind of troop levels would be with a draft. Good luck getting that through Congress.  And if 42% of the public are now calling the decision to go to Afghanistant “a mistake” (much higher than any time previously), then there is no way that the public would tolerate a continued high-volume presence for another FOUR years, never mind  EIGHT.

Whatever the plan is for Afghanistan, it must be something that is politically and economically possible and doesn’t make the nation more vulnerable in the process.  That’s going to demand a different, peacemaking approach.  I don’t know if the president is talking to the right kinds of people to shape such an approach, but I hope so.

I hope the president is listening because I still fear that Afghanistan could be for Obama what Vietnam was for LBJ: derailing a progressive domestic agenda.

March 17, 2009 Posted by | Afghanistan | 6 Comments

53% of Americans Support Making it Easier to Join Unions

A new independent Gallup poll shows that Americans support the Employee Free Choice Act (EFCA) by 53%.  That’s a 14 point gap between the supporters and the 39% who oppose EFCA (the rest are undecided).  The  Employee Free Choice Act is a bill that would make forming a union easier.  Currently, if workers want a union they must first sign a petition or cards showing enough support for an election. Then go to management. Management is supposed to schedule  a secret ballot election.  What really happens is that management calls in professional union busters who teach them how to intimidate workers into voting it down–including many tactics which are illegal but unlikely to get the company caught and sanctioned.

UPDATE: I’ve changed the title of this post to reflect the actual wording of the poll as published in USA Today. I have  tried to find out if the Gallup Poll mentioned EFCA by name in its question or if it spelled out something close to EFCA’s provisions, to no avail.  So, the actual poll shows less than I first thought. It shows: 1. Americans are generally in favor of more unions and know that the erosion of unions has led to the weakening of the Middle Class. 2. Americans are aware that the current rules throw many roadblocks in the way of workers’ legal rights to unionize and use collective bargaining for better wages, benefits, and working conditions.

The poll can still be useful to advocates of EFCA in pushing Congress to pass the bill, but Gallup would have helped us more if it had mentioned EFCA by name or given its actual provisions (e.g., “Would you favor giving workers’ the right to skip secret ballot elections if over 50% signed cards in favor of unionization? Or a supermajority of 60%? Would you favor workers rather than management scheduling the elections for unionization? Would you favor more enforcement of labor laws to prevent management from union busting?”).  I suspect that the majority would still be in favor, but someone should poll with these questions to give us actual data.

EFCA would give employees the choice to skip the scheduled election. If the majority just sign the cards, the union is formed. Opponents keep repeating the lie that EFCA would take away the right to secret ballot elections and leave workers open to union intimidation. False.  The right to secret ballot elections is preserved, but the workers get the choice. And, if they choose an election, the workers, not management, get to schedule it.

Congress passed EFCA in 2007 and it was vetoed by then-Pres. Bush.  Pres. Obama has promised to sign it, but several of the Senate Democrats who previously voted for it (Lincoln (D-AR), Pryor (D-AR), Landrieu (D-LA), Bayh (D-IN) ) are now wavering, along with the one GOP Senator who voted for it, Arlen Specter (R-PA).  If any of these are your Senators, you might show them that, once again, the American people are ahead of their elected officials.

More unions will not, of course, help speed up economic  recovery–but it will help us ensure that we create an economy that works for everyone.  Instead of just protecting the white collar folk who shower before work, let’s start standing up for those who  need to shower when they come home from work, too.

UPDATE: The U.S. Chambers of Commerce and several major corporations like Wal-Mart have promised to fight EFCA in the courts if it passes. Let them.  The struggle for a wide middle class will never be easy.  But EFCA will help to level the playing field.  The current Wall Street greed also helps our cause as people see that the rich have been waging class war on us for some time–and then crying “class war” whenever working people organize for justice.

March 17, 2009 Posted by | economic justice | 2 Comments