Repeat After Me

"Regulatory capture is a myth"

As George H. Painter was preparing to retire recently as one of two administrative law judges presiding over investor complaints at the Commodity Futures Trading Commission, he issued an extraordinary request: 

Please don't assign my pending cases to the other judge. 

In a notice recently released by the CFTC, Painter said Judge Bruce Levine, his longtime colleague, had a secret agreement with a former Republican chairwoman of the agency to stand in the way of investors filing complaints with the agency. 

"On Judge Levine's first week on the job, nearly twenty years ago, he came into my office and stated that he had promised Wendy Gramm, then Chairwoman of the Commission, that we would never rule in a complainant's favor," Painter wrote. "A review of his rulings will confirm that he fulfilled his vow," Painter wrote. 

Painter continued: "Judge Levine, in the cynical guise of enforcing the rules, forces pro se complainants to run a hostile procedural gauntlet until they lose hope, and either withdraw their complaint or settle for a pittance, regardless of the merits of the case." 

The CFTC oversees trading of the nation's most important commodities, including oil, gold and cotton. The agency's administrative law judges handle cases in which investors allege that trading professionals or financial firms violated the rules. 

 Gramm's name in this is no surprise, considering to whom she was married and the infamous corporate board she soon wound up sitting on.

Headline Of The Day

From the "no shit" headline department:

 Banks Shared Clients’ Profits, but Not Losses

Here is the deal: Funds lend some of their stocks and bonds to Wall Street, in return for cash that banks like JPMorgan then invest. If the trades do well, the bank takes a cut of the profits. If the trades do poorly, the funds absorb all of the losses. 

The strategy is called securities lending, a practice that is thriving even though some investments linked to it were virtually wiped out during the financial panic of 2008. These trades were supposed to be safe enough to make a little extra money at little risk. 

JPMorgan customers, including public or corporate pension funds of I.B.M., New York State and the American Federation of Television and Radio Artists, ended up owing JPMorgan more than $500 million to cover the losses. But JPMorgan protected itself on some of these investments and kept millions of dollars in profit, before the trades went awry. 

"Went awry."

Hehe.

But they got theirs, and that's all that matters.

These Are Not Accidents

The financial crisis was not an accident or series of accidents, as has been proclaimed by its progenitors and the involved industries and even much of government itself. It was the logical outcome of releasing large corporations from any sane regulatory restraint, and worse, in many cases writing new regulations specifically allowing and encouraging extremely risky behavior.

With other people's money. And they got to keep all the profits. Personally.

Then there was the housing bubble, an intrinsic part of this grand theft of unsurpassed proportions, actively inflated by the Bush administration from pretty much day one of operations. The giant financial corporations and their many ill-spawned children were directly involved in creating a mortgage morass that now has companies foreclosing on homes they have no legal claim to, using an evidence free bald assertion process in letters to homeowners and the few courts in which they've been challenged to prove their "rights."

Which leads the ever spot-on Paul Krugman to note and ask:

The accounting scandals at Enron and WorldCom dispelled the myth of effective corporate governance. These days, the idea that our banks were well capitalized and supervised sounds like a sick joke. And now the mortgage mess is making nonsense of claims that we have effective contract enforcement — in fact, the question is whether our economy is governed by any kind of rule of law.

In fact, it is governed by a kind of rule of law, the law that the rich and powerful create on the fly and assert behind the cover of armies of lawyers trained in the arcana of the regulations these same corporations wrote in rooms just off the floor of Congress in the late 1990s and all of the 2000s. And Krugman is also correct when he talks in that same cloumn about the essential character of every Obama response to the banks, mortgage companies and other criminal organizations and their leaders - utter deference in all things. 

We Can't Build Shit

I once visited Hoover Dam at the Nevada-Arizona border. I'd been up most of the night before playing nickel slots in the lobby of the Sahara where we were staying, so when my future brother in law and I set out I was pretty tired, but it was nothing a few jugs of coffee couldn't cure.

Approaching the dam is a lot like approaching Las Vegas itself - the dry desert heat suddenly gives way to this humid wash of air, a sign of the excess water displays in the city, and of the Colorado river itself, trapped in narrow Black Canyon. Then you see the gigantic power line towers that stick out at an angle over the river, guiding the massive electricity cables up over the lip of the canyon to set them on a path parallel to the ground, carrying power to multiple states.

As if that isn't incredible enough to look upon, you eventually wend your way around the two lane black top to see the top of the dam itself, which looks rather thin at first glance, until you realize this is just the top of a massive 700+ foot tall structure that is 660 feet thick at its base. The word "awesome" is much overused in American culture, but this thing easily qualifies.

The interior is as impressive as the exterior, with marble floors and Deco accents all over the place. It is an industrial construct of absolute beauty.

Hoover Dam was constructed both ahead of schedule and under budget. We could argue all day about the environmental effects of American dam building generally, worker safety in the 1930s, our water use policies, and electricity consumption, but the thing itself is a major work of human engineering, capital, and will.

Flash forward to 2010. A tunnel connecting New York and New Jersey to double the rate of passenger travel between those two destinations (for which current carrying capacity is already over taxed) that has been in the works for 20 years has suddenly ground to a halt because the new governor of New Jersey, a fiscal charlatan named Chirs Christie, has decided his state can no longer afford its share.

I'll let the estimable Bob Herbert put it in words  I never could:

The United States is not just losing its capacity to do great things. It’s losing its soul. It’s speeding down an increasingly rubble-strewn path to a region where being second rate is good enough. 

The railroad tunnel was the kind of infrastructure project that used to get done in the United States almost as a matter of routine. It was a big and expensive project, but the payoff would have been huge. It would have reduced congestion and pollution in the New York-New Jersey corridor. It would have generated economic activity and put thousands of people to work. It would have enabled twice as many passengers to ride the trains on that heavily traveled route between the two states. 

The project had been in the works for 20 years, and ground had already been broken when the governor of New Jersey, Chris Christie, rejected the project on Thursday, saying that his state could not afford its share of the costs. Extreme pressure is being exerted from federal officials and others to get Mr. Christie to change his mind, but, as of now, the project is a no-go. 

This is a railroad tunnel we’re talking about. We’re not trying to go to the Moon. This is not the Manhattan Project. It’s a railroad tunnel that’s needed to take people back and forth to work and to ease the pressure on the existing tunnel, a wilting two-track facility that’s about 100 years old. What is the matter with us?

The rest is well worth reading, as Herbert ties this sort of rudderless leadership to the present unemployment emergency, about which no one seems willing to do the heavy lifting to solve the problem. 80 years ago government created agencies to contract with companies and individuals to build a modern infrastructure, much of which we still enjoy today, crumbling as it may be, and to simply put people to work to give them spending money and some small, precious shred of dignity. These days, we determine the right amount of stimulus to jolt the economy back into gear, then cut it in half before even considering whether to enact it. We have become beholden to an ideology that proclaims government is incapable of doing anything at all useful, and when the proponents of that ideology take power, they make sure that view becomes a self-fulfilling prophecy. This is the ideology of the modern Republican Party, which was carried out quite efficiently during the W. years, when people were appointed to head agencies overseeing the very sectors of industry from which they made their many millions, regulations were slashed, discarded, or simply ignored, and a form of maximalist capitalism known as "got mine" was allowed to run untethered by sanity or prudence. 

As a result, the electorate, the alleged party of opposition which now holds power, and the media have bought the idea that this sort of thinking is true, that, at default, government is evil and always incompetent if not down right criminal, and thus can never be part of the solution to major national problems such as those we have been facing for the last three years. It is a poisonous, false ideology, and it is destroying our country's ability to do anything useful for anyone who isn't already stinking rich.

I've got news for you motherfuckers. We ain't number 1. At anything. Not anymore.