Republicans are on the defensive. As we enter the 2010 election cycle, Republicans are a bit worried that Americans might remember how their maniacal push to deregulate Wall Street resulted in the collapse of the global economy on their watch. They need a new message to appeal to hard-hit voters. To the rescue comes renowned Republican strategist and spinmeister Frank Luntz.
Real Economy Project
Davos is a small resort town in Switzerland best known for hosting the World Economic Forum (WEF), an annual meeting of global political and business elites. Every year the biggest boosters of the "neoliberal" economic policy agenda of deregulation, unfettered global trade and strict International Monetary Fund (IMF) rules for poor countries, convene at Davos to pat each other on the back.
Now that these policies have almost brought the world to ruin, one would expect these global titans to be self-reflective and perhaps even apologetic. Mostly they were absent.
A group of pinstriped traders, upset with the bank-bashing rhetoric emanating from Washington, launched a Wall Street defense campaign the same morning that Treasury Secretary Tim Geithner was being grilled by Congress.
The debate over banks and banking came front and center this week. In his toughest language yet, President Barack Obama vowed to veto financial reform legislation that is not tough enough on Wall Street. "The lobbyists are already trying to kill it," Obama told Congress in his State of the Union address. "Well, we cannot let them win this fight.
While President Obama is in Washington talking about putting a freeze on government spending, soon millions of American families will be out in the cold. In one month, one million Americans are slated to lose their unemployment insurance. Millions more will follow.
Opposition has been mounting to the reconfirmation of Ben Bernanke as Federal Reserve Chairman. In recent days, Senators Barbara Boxer (D-CA) and Russ Feingold (D-WI) and John McCain (R-AZ) announced that they would vote no. Today, Senator Tom Harkin told the DesMoines Register he would be a no vote. If Bernanke does not get a vote this week, before the formal end of his first term, it would send shock waves through Wall Street.
Although he was named Time magazine's "Man of the Year" due to his handling of the financial crisis, Boxer and Feingold reprise a bit of forgotten history. “Dr. Bernanke played a lead role in crafting the Bush administration’s economic policies, which led to the current economic crisis. Our next Federal Reserve chairman must represent a clean break from the failed policies of the past,” said Boxer.
The President took on Wall Street Thursday. Stocks plummeted, consumer activists cheered. Now we are talking.
Obama's throwdown comes hard on the heels of the special election in Massachusetts in which public outrage over the bank bailout and the state of the staggering economy played a major role. As we have already reported, Republican Scott Brown seized the Democratic stronghold by billing himself as a man of the people and using public dismay with the Wall Street bailout to his advantage on the campaign trail. On Thursday, Obama showed he got the message.
For the first time, the President's narrative directly blamed Wall Street for the crisis and proposed a major structural reform to business-as-usual. After freeing former Federal Reserve Chairman Paul Volcker from the closet he had been stuffed in at the Treasury Department, Obama brought him out to announce new measures long advocated by Volcker.
Massachusetts Attorney General Martha Coakley lost her special-election for the Senate seat vacated by the untimely passing of U.S. Senator Edward Kennedy. Much has been said about the role of health care reform in the race. Apparently everyone in Massachusetts has health care and reasonable doubts about an expensive national plan that might not improve their services.
But in the final days -- lagging in the polls -- the race was less about health care and more about the Wall Street bailout and the state of the economy. Her opponent, Scott Brown, successfully capitalized on the bailout blues and Coakley pulled out the big guns and resorted to a theme she perhaps should have emphasized throughout, bashing the big banks.
Senate Banking Chairman Chris Dodd (D-Conn.) was considering dropping the idea of creating an independent, stand-alone consumer protection body, empowered to crack down on banking abuses, in order to get a regulatory revamp passed this year with bipartisan support. Dodd is apparently considering shrinking the CFPA into a division of an already-existing federal agency (no doubt one with a proven track-record of failing consumers.)
Dodd is faced with a dilemma. Although he introduced a rather strong financial services reform bill in Congress last year -- one which creates an independent CFPA, curtails the powers of the Federal Reserve and tackles many Wall Street abuses -- it appears that big bank lobbyists who have spent millions fighting reform are now chipping away at his bill.
U.S. Attorney General Eric Holder appeared before the Financial Crisis Inquiry Commission today. He cited his strong statutory authority to go after the firms that had a role in the worst economic disaster since the Great Depression. His team was tackling securities fraud, accounting fraud, financial discrimination and fraud related to the stimulus bill. It was an impressive list, but what was not impressive was the first case he touted – Bernie Madoff.
You remember Bernie. His kids turned him in. It appears that the FBI considers this the high-water mark of criminal detective work.