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Inside the New Print Edition of Our Subscriber-Only Newsletter! Report From the Afghan Front
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Inside the New Print Edition of Our Subscriber-Only Newsletter!
Report From the Afghan Front
It's Obama's War and It's Going Very BadlyExclusively for CounterPunch subcribers, Patrick Cockburn files a special report from Kabul: the Taliban's tightening grip on most of the country; plumetting US popularity in a bankrupt country rotted by corruption. For fifty years, Seymour Melman waged intellectual war on Pentagon capitalism, making the case for peaceful conversion. David Price brings to light decades of FBI secret surveillance. Senator Jim Webb is launching the first determined bid in forty years to overhaul the US criminal justice system at whose call is the American gulag. Alexander Cockburn reports on the prospects for his success. Get your new edition today by subscribing online or calling 1-800-840-3683 Contributions to CounterPunch are tax-deductible. Click here to make a donation. If you find our site useful please: Subscribe Now! CounterPunch books and gear make great presents.
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Today's Stories June 18, 2009 Uri Avnery June 17, 2009 Carl Boggs Dr. Bryant Welch Winslow T. Wheeler Liaquat Ali Khan Jonathan Cook Binoy Kampmark Karim Makdisi Dave Lindorff David Swanson Gene Marx Website of the Day June 16, 2009 Patrick Cockburn John Ross Afshin Rattansi Marc Levy Paul Craig Roberts Behzad Yaghmaian Brian M. Downing Merle Lefkoff David Macaray Robert Jensen David Swanson Website of the Day June 15, 2009 Michael Hudson Reza Fiyouzat Patrick Cockburn James Ridgeway Marjorie Cohn Rannie Amiri Dave Lindorff Ron Jacobs Leonard Schwartz Martha Rosenberg Website of the Day June 12-14, 2009 Alexander Cockburn Gareth Porter Mike Whitney Mark Ames Esam Al-Amin Franklin Lamb Patrick Cockburn Andy Worthington Heather Gray Felice Pace Ron Jacobs George Wuerthner Jeffrey Buchanan / David Ker Thomson Renaud Lambert Kevin Zeese David Macaray Evelyn Pringle Chris Genovali David Michael Green Brian J. Foley Charles R. Larson Kim Nicolini David Yearsley Lorenzo Wolff Poets' Basement Website of the Weekend
June 11, 2009 Kathy Kelly / James Bovard Tristan de Bourbon Dave Lindorff Kevin Zeese Ralph Nader Harvey Wasserman Nicole Colson Mark Weisbrot Dan Bacher Website of the Day June 10, 2009 Ismael Hossein-Zadeh Jennifer Van Bergen / Douglas Valentine Kathy Kelly Paul Craig Roberts Rev. William E. Alberts Peter Lee Carol Miller Emily Ratner Robert Weissman Dave Lindorff Website of the Day June 9, 2009 Winslow T. Wheeler Mike Whitney Stan Cox Sibel Edmonds Jonathan Cook David Macaray Robert Jensen Nadia Hijab Mark Weisbrot Website of the Day June 8, 2009 John Ross Paul Craig Roberts Franklin C. Spinney Franklin Lamb Uri Avnery Jonathan Cook Eric Toussaint Jim Goodman Norman Solomon Reza Fiyouzat Website of the Day June 5 -7, 200 Alexander Cockburn George Galloway Paul Craig Roberts Jennifer Loewenstein Franklin Lamb Mike Whitney Andy Worthington Missy Comley Beattie Farzana Versey Stanley Heller John V. Whitbeck Robert Weissman Lee Sustar Dave Lindorff William Blum Ernest Callenbach / Greg Moses Ron Jacobs David Yearsley Tim Stelloh Belén Fernández David Ker Thomson Karyn Strickler Christopher Brauchli Charles R. Larson Kim Nicolini Lorenzo Wolff Poets' Basement Website of the Weekend June 4, 2009 Arno J. Mayer Mike Whitney Gareth Porter Ayesha Ijaz Khan Mouin Rabbani Jordan Flaherty Adam Turl Nikolas Kozloff Yifat Susskind Website of the Day June 3, 2009 Paul Craig Roberts Kathy Kelly Alan Farago Franklin Lamb Bill Hatch Nadia Hijab Dean Baker Binoy Kampmark Manuel Garcia, Jr. Remi Kanazi Behzad Yaghmaian Website of the Day June 2, 2009 Uri Avnery Robert Weissman Conn Hallinan Gideon Spiro Roger Burbach Dylan Quigley Dave Lindorff Ray McGovern Belén Fernández Martha Rosenberg Willie L. Pelote, Sr. Website of the Day June 1, 2009 Pam Martens Yitzhak Laor Mark Weisbrot Ramzy Baroud Saul Landau Eugenia Tsao Afshin Rattansi Debra Sweet Abdul Malik Mujahid Bill Quigley John Wright Website of the Day May 29-31, 2009 Alexander Cockburn Patrick Cockburn Vijay Prashad Gary Leupp Ray McGovern Rannie Amiri Bill Hatch Chellis Glendinning, Stephanie Mills and Kirkpatrick Sale Phyllis Pollack David Yearsley Jean-Christophe Servant Dave Lindorff James McEnteer Missy Beattie James C. Faris David Macaray Harvey Wasserman Adam Federman David Ker Thomson Mark Seth Lender Stephen Martin Joseph Nevins Sophia Mihic Lorenzo Wolff Poets' Basement Website of the Weekend May 28, 2009 Joan Roelofs Paul Craig Roberts Ralph Nader Mouin Rabbani Joe Bageant James McEnteer Dedrick Muhammad Richard Morse David Macaray Harvey Wasserman Website of the Day May 27, 2009 Joanne Mariner Paul Craig Roberts Walden Bello Dave Lindorff Brian M. Downing Carlos Villarreal Nadia Hijab Adam Federman Laray Polk Isabella Kenfield David Michael Green Website of the Day May 26, 2009 Manuel Garcia, Jr. Mike Whitney Sharon Smith Marjorie Cohn Dean Baker Deepankar Basu Fred Gardner Jordan Flaherty Josh Ruebner Brian Cloughley Website of the Day May 25, 2009 Diane Christian John Ross Kenneth Hartman Uri Avnery Fred Gardner Cindy Sheehan Sen. Russell Feingold Sibel Edmonds Franklin Lamb Dave Lindorff Daniel Wolff Website of the Day May 22-24, 2009 Alexander Cockburn Michael Teitelman Mike Whitney Ray McGovern Sonia Cardenas / Clive Hamilton Conn Hallinan Fred Gardner Carlo Cristofori Dean Baker Rannie Amiri Andy Worthington David Macaray Nadia Hijab Franklin Lamb Ted Newcomen David Ker Thomson David Rosen Mark Weisbrot Robert Fantina Heather Gray Farzana Versey Chris Genovali Ron Jacobs Jay Diamond Dr. Susan Block Ben Sonnenberg David Yearsley Lorenzo Wolff Poets' Basement Website of the Weekend May 21, 2009 Jeffrey St. Clair / Paul Craig Roberts Chris Floyd Gerald Paoli Zach Mason Uri Avnery Andy Worthington Niranjan Ramakrishnan Norman Solomon Dave Lindorff Website of the Day May 20, 2009 Michael Hudson Gary Leupp Michael D. Yates Jonathan Cook Peter Lee Binoy Kampmark Peter Zinn William Loren Katz Gary Lapon Trudy Bond Website of the Day May 19, 2009 Kristoffer Rehder Mike Whitney Ray McGovern Vijay Prashad Mirjam Hadar Meerschwam Mustafa Barghouthi Andy Worthington Binoy Kampmark John Walsh David Macaray Website of the Day May 18, 2009 Dave Lindorff Abdul Malik Mujahid Jonathan Cook Ben Rosenfeld Patrick Cockburn Ralph Nader Stephen Soldz Eugenia Tsao Walter Brasch Roberto Rodriguez Charlotte Laws Website of the Day May 15-17, 2009 Alexander Cockburn Jeffrey St. Clair David Rosen Mike Whitney Bruce Page Jeremy Scahill Fred Gardner Tom Barry Mats Svensson Ramzy Baroud Mark Engler Mark Weisbrot Farzana Versey Ron Jacobs Hannah Wolfe Cal Winslow David Macaray Christopher Brauchli Mark Seth Lender Robert Fantina David Ker Thomson Stephen Martin Charles R. Larson Chase Madar Kim Nicolini David Yearsley Lorenzo Wolff Poets' Basement Website of the Weekend May 14, 2009 Michael Hudson Andy Worthington Paul Craig Roberts Jonathan Cook Ray McGovern Lance Selfa David Green Dave Lindorff Frida Berrigan Sue Udry Website of the Day May 13, 2009 Brian M. Downing Gareth Porter Robert Sandels Ricardo Alarcón Eric Walberg Dave Lindorff Deepak Tripathi William S. Lind Kevin Zeese Franklin Lamb Website of the Day May 12, 2009 Gary Leupp Richard Neville Wajahat Ali Dean Baker Franklin Lamb Norman Solomon Paul Craig Roberts Lisa M. Hamilton Bob Fitrakis / David Macaray Website of the Day May 11, 2009 Andrea Peacock Michael Hudson Patrick Cockburn Ralph Nader John Kelly Saul Landau Dave Lindorff David Michael Green Anthony Papa Paul Krassner Website of the Day
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June 18, 2009 The Good, the Bad and the UglyObama's Financial Sector Reform PlanBy ROBERT WEISSMAN There are major gaps and shortcomings in the Obama administration's financial regulatory proposals, formally released today, and the proposals alone leave the financial sector vulnerable to future crisis. Still, it's nice to be able to say that the proposal does contain meaningful reforms. Whether those meaningful reform proposals become law is no sure thing, and will depend on the administration's willingness to stare down Wall Street -- which still retains immense political power, despite its partial self-immolation -- and on whether a mobilized public demands Congress act for consumers, not contributors. The 85-page draft released today is qualitatively different than the bullet-point plans previously issued by the Treasury Department. It contains detailed proposals, spanning across the financial regulatory spectrum, not easily summarized. Here are only some key elements -- first, the good, then the bad. The Good 1. The administration supports creation of a strong Consumer Financial Regulatory Agency. It proposes to give this new agency very strong powers, and jurisdiction over consumer protection rules -- taking away authority from existing regulators (like the Federal Reserve) that have failed utterly to protect consumers. It favors simplicity and gives the new agency the authority to mandate financial firms offer "plain vanilla" loans along with the more complicated packages they prefer. It gives the agency authority to ban mandatory arbitration provisions that strip consumers' right to go to court for redress of scams and rip-offs. And it establishes that the new agency's rules will be a regulatory floor, with states permitted to adopt stronger protections. 2. The administration proposes to reduce speculative betting, through new standards on leverage. One reason the financial crisis spun out of control was financial firms' excessive use of "leverage" -- borrowed money. Heavily leveraged, the top commercial banks and investment banks overreached with very risky loans and investments. The administration proposes that all systemically important financial firms be subjected to higher capital reserve standards (meaning they can rely less on borrowed money). The administration properly says these rules should apply to any systemically important firm, whether or not it is a bank. It defines systemically important as a firm "whose combination of size, leverage and interconnectedness could pose a threat to financial stability if it failed." There are still important details to be worked out here, including how much capital such firms must maintain. And there is the very worrisome element that it is the Federal Reserve that is given primary responsibility for overseeing these systemically important firms. 3. Through "skin-in-the-game" rules, the administration aims to prevent predatory and reckless lending. One reason lenders were willing to make so many predatory and bad-quality mortgages -- including but not limited to the class of "subprime" loans -- was that mortgage originators did not hold on to the loans. Mortgage brokers cut deals on behalf of banks and non-bank originators, which in turn sold the resulting mortgages to other banks. These banks, in turn, sliced and diced the mortgages, combined them into packages of pieces of thousands of other mortgages, and sold them to all kinds of investors. Because the initial lender did not maintain an ongoing interest in the mortgage, they did not have any incentive to ensure they were making a quality loan. The administration proposes that loan originators be required to keep, at minimum, a 5 percent exposure in loans. 4. The administration seeks power to take over failing, systemically important financial firms. The government already has such "resolution" power for commercial banks. The Federal Deposit Insurance Corporation regularly takes control over failing banks and "resolves" them outside of the bankruptcy process. This typically means selling off the failing bank to another bank, often after separating its good assets from bad. FDIC is expert at this process, moves very quickly, and averts the harmful consequences from extended bankruptcy processes. The government does not have the legal authority to undertake comparable measures for important non-bank firms. This includes investment banks (think Lehman Brothers) and insurance companies (think AIG). Giving the government resolution power for non-banks should help control financial panic. The Bad 1. The administration does not propose to do anything serious about executive pay and top-level compensation for financial firms. The administration does support "say-on-pay" proposals, which give shareholders the right to a *non-binding* vote on executive compensation. But a non-binding vote isn't worth too much; and, more importantly, shareholders are often willing to support excessive compensation while risky bets are paying off. In terms of financial stability, the imperative is to do away with the Wall Street bonus culture, where executives and traders are given extraordinary bonuses -- often four or more times base salary -- based on annual performance. This bonus culture gives traders and executives alike an incentive to take big bets -- because they get massive payoff if things go well, and don't suffer if they go bad, or go bad sometime in the future. This is a structural problem, not a symbolic one. Anyone who thinks pay isn't of overriding importance in financial regulation should have been set straight by the desperation of the bailed out Wall Street firms to pay back their loans from the government. That desperation is overwhelmingly tied to a desire to escape the extremely modest pay standards issued by the Obama administration. Besides financial stability, there are important questions of economic justice and taxpayer rights related to executive compensation. The Wall Street hotshots -- including the major hedge fund players -- have paid themselves unfathomable amounts of money over the last decade. They have set an aspirational standard for other executives and professionals, and helped drive wealth and income inequality to outrageous and unhealthy levels. Ultra compensation should be taxed at very high rates; and, at a bare minimum, the loopholes that let hedge fund managers pay taxes at about half the rate of regular folks must be closed. The case for aggressive tax reform on ultra rich financiers was overwhelming last year; now, with the financial system completely dependent on taxpayer largesse, there shouldn't be anything left to debate. No one in finance can say they made their money just by working hard or being clever -- their system was saved by the government. 2. The administration does not propose structural reform of the financial sector. Although it proposes some meaningful regulatory reform, and modest alteration of the structure of regulatory agencies, the administration does not propose to alter the structure of the financial sector itself. There is no discussion of returning to Glass-Steagall principles, to separate commercial banking from other financial activities including the speculative world of investment banking. Glass-Steagall was adopted during the Great Depression, as a response to financial abuses that closely parallel those of the previous decade. Repeal of Glass Steagall -- following a decades-long erosion -- came in 1999, and helped pave the way for the present crisis. Nor is there any discussion of shrinking the size of goliath financial firms. Everyone now recognizes the problem of too-big-to-fail and too-interconnected-to-fail financial firms. The administration proposes to deal with the problem through regulation alone; a more fundamental approach would break up giant firms (or at least commit to prevent further consolidation going forward). Addressing structure and size is important not only because of the economic power accreted by the goliaths, but because of their political strength -- about which, see below. 3. The administration's approach to regulating financial derivatives is too timid. To its credit, the administration proposes to repeal recent deregulatory statutes and establish regulation of financial derivatives. But its plan does not go far enough. It creates a regulatory exemption for customized derivatives -- a loophole that will create lots of business for corporate lawyers ready to change terms in derivative contracts so that they differ somewhat from standardized terms. Nor does the administration propose to ban classes of dangerous financial instruments that cannot be justified. A clear example of a product that should be banned is a credit default swap -- a kind of insurance against a certain outcome, like the inability of a bondholder to make required payments -- in which neither party has a stake in the underlying transaction. Such credit default swaps have no insurance component, and are nothing more than bets -- but they are bets that can vastly exceed the value of the transaction being bet on, and can spread financial contagion, as AIG demonstrated. George Soros argues that all credit default swaps basically share this feature, and should be banned altogether. The administration proposal also fails to require that exotic financial instruments be subjected to pre-approval requirements. Under such an approach, financial firms would be required to show that new instruments offer some social benefit, and do not pose excessive risk. 4. The administration does not propose to empower consumers. There is enormous merit to the proposal for a Consumer Financial Products Agency. But it is not a substitute for giving consumers the power to organize themselves to advance their own interests. Simply mandating that financial firms include in bills and statements (whether mailed or e-mailed) an invitation to join an independent consumer organization would facilitate tens of thousands of consumers -- and likely many more -- banding together to make sure the regulators do their job, and to prevent Wall Street from "innovating" the next trick to scam borrowers and investors. The Ugly Identifying the merits and gaps in the administration's proposal is important. But the proposal does not exist in a vacuum, and it doesn't become law just because the administration has proposed it. The Wall Street types don't know shame. Having benefited from literally trillions of dollars of taxpayer largesse, one might expect that they would be embarrassed to lobby on Capitol Hill. Or, that Members of Congress would be unsympathetic to their pleas. But that's not how Washington works. Having spent $5 billion on political investments over the last decade, Wall Street continues to pour cash into the political process -- and those investments continue to pay handsomely. To understand how things work, consider the fate of the proposal to give bankruptcy judges the power to adjust mortgages, so that they could reduce the principal owed on loans on homes now worth less than value of the loan. Then-candidate Barack Obama campaigned in favor of such "cram-down" provisions. In a rational world, banks would agree to these adjustments to principal on their own, because they do better if people stay in their homes and continue paying on the loan, rather than by forcing foreclosure. Not long ago, it was widely expected that cram-down would quickly become law. But the banks deployed their lobbyists, and this vital though totally inadequate measure was defeated in May. The Obama administration sat quietly by. Now, Wall Street is already trashing the good parts of the administration's proposals. "Congress is not going to impose a 'skin-in-the-game' requirement on all loans," Jaret Seiberg, an analyst with Washington Research Group, a division of Concept Capital, flatly tells American Banker. The Chamber of Commerce and other industry groupings are attacking the idea of a Consumer Financial Product Agency, including with the extraordinary claim that it will improperly relieve consumers of their duty to do "due diligence" on financial products. Hedge funds are hiring ever more lobbyists and floating the claim that the administration's requirements for some modest disclosure requirements for secretive hedge funds could do more damage than good. One purported reason: the disclosures may be too complicated for regular people to understand. There's no question that Wall Street is going to mobilize -- is already mobilized -- to defeat the administration's positive proposals. What remains very much in question is the administration's willingness to engage in bare-knuckled political fighting to defend these proposals, as well as whether the public will be mobilized to support these and other moves to control Wall Street. A new public interest coalition -- Americans for Financial Reform -- aims to do just that, but they are fighting on occupied territory. As Senator Majority Whip Richard Durbin says, "the banks are still the most powerful lobby on Capitol Hill. And they frankly own the place." Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor and director of Essential Action. |
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