Attack Wall Street, Not Social Security by Dean Baker April 13, 2010 by The Guardian/UK
Suppose our top generals described the growing threat from a hostile Middle East power. The country has tens of billions of oil dollars, a growing army, chemical and biological weapons, and is in the process of developing nuclear weapons. After carefully describing the risks posed by this country, our generals suggested an immediate attack on Canada. They explain that combating this Middle East country would be difficult, but defeating Canada is easy.
This is essentially the story of the latest attack on social security. Everyone who looks at the projections agrees; the scary budget stories being hyped in the media and by the Wall Street crew are driven almost entirely by projections of exploding healthcare costs. But instead of proposing ways to fix the healthcare system, these deficit hawks want to attack social security. They tell us that fixing healthcare is hard. By contrast they think that cutting money from social security will be relatively easy.The facts on this are straightforward and known by everyone involved in the budget debate. The US healthcare system is broken. We pay more than twice as much per person as the average for other wealthy countries.
The long-term problem is not that anything improper has been done with the programme; the reason that social security is projected to eventually face a shortfall is that future generations are projected to live longer than we do. This raises costs since our children and grandchildren are projected to enjoy longer retirements than we do. In short, there is no story of generational inequity here, contrary to what the Wall Street deficit hawks say.
If our deficit hawk generals are too scared to take on the healthcare industry then we also have to also make them too scared to take on social security. If we need to reduce the deficit the best place to start is a financial speculation tax. A modest set of financial transactions taxes, like the 0.5% tax on stock trades in the United Kingdom, can easily raise $150bn a year. This would go a long way toward addressing future budget shortfalls and it would raise money from people who can afford it: the Wall Street crew whose financial shenanigans led to the meltdown. Federal Reserve board chairman Ben Bernanke recently suggested cutting social security because: “that’s where the money is“. That’s not true, the real money is on Wall Street. Let’s go get it. READ MORE: http://www.commondreams.org/view/2010/04/13-2
Big Banks Rebel Against Push to Help Struggling Homeowners by James R. Hagerty April 13, 2010 by The Wall Street Journal
Some big U.S. banks are pushing back against the idea that they should slash mortgage balances for millions of troubled borrowers.
In written testimony prepared for a hearing in Washington Tuesday of the House Financial Services Committee, some of the nation’s top mortgage lenders warned of the risks of relying heavily on forgiving principal as a means of averting foreclosures
That may set up a clash with Rep. Barney Frank, chairman of the committee, and other lawmakers eager for more aggressive action to prevent foreclosures. In a letter last month to four big banks, Rep. Frank, a Massachusetts Democrat, argued that “to save homes on a large scale, we must move past temporary modifications in interest rates or terms and focus on permanent principal reductions that result in truly sustainable mortgages.”and argued for concentrating mainly on other methods, such as reducing interest rates.
The Obama administration recently announced plans to put somewhat more emphasis on reducing principal in its foreclosure-prevention program.
To write down loans enough to bring those debts down to no more than the home values would cost $700 billion to $900 billion, J.P. Morgan Chase estimated in its testimony. That would include costs of $150 billion to the Federal Housing Administration and government-controlled mortgage investors Fannie Mae and Freddie Mac, the bank said.
J.P. Morgan also said broad-based principal reductions could raise costs for borrowers if mortgage investors demand more interest to compensate for that risk. Borrowers probably would have to increase down payments, and credit standards would tighten further, the bank said.
Wells Fargo said principal forgiveness “is not an across-the-board solution” and “needs to be used in a very careful manner.” Bank of America said that it supports principal reductions for some customers whose debts are high in relation to their home values and who face financial hardships but that “solutions must balance the interests of the customer and the (mortgage) investor.” READ MORE: http://www.commondreams.org/headline/2010/04/13
Obama’s Efforts to Foster Harmony on Wall St Reform Erupt into Warfare by Giles Whittell April 15, 2010 by TimesOnline/UK
America’s most powerful politicians met at the White House yesterday for the start of a six-week battle in which both main parties will fight for the right to claim that they are taming Wall Street’s wildest excesses and safeguarding a resurgent US economy.
Emboldened by continuing popular disgust over the big banks’ role in the worst US recession since the 1930s, President Obama invited Republican leaders to what was billed as a cordial bipartisan discussion of financial regulatory reform.
It was anything but. In an hour-long meeting that appears to have deepened party divisions over the future of the economy, Mr Obama attacked his Republican guests for their closeness to Wall Street lobbyists, demanded a complete overhaul of the risky derivatives markets that led to the brink of a financial meltdown two years ago and accused Republicans of a “campaign of misinformation” about his reforms.
In open defiance of Mr Obama’s call for cross-party backing for the Senate finance Bill, Mitch McConnell, the Republican Senate minority leader, denounced the Bill minutes after the White House meeting as a recipe for institutionalising the bank bailouts of 2008. The $85 billion (£50 billion) rescue of the AIG insurance giant in particular has become a reviled symbol of taxpayer-funded indulgence of Wall Street irresponsibility.
This is the first serious test of Mr Obama’s ability to sway Congress since senior Republicans, including Senator John McCain, vowed to block every item on his domestic agenda after their defeat on healthcare.
Democrats still fear that victory may cost them dearly at the midterm elections but they are confident that when it comes to reining in Wall Street they will have the public behind them.
“This ought to be a bipartisan Bill and I think in the end it will be,” Mr Goolsbee said.
The White House is calculating that Republicans who choose to remain opposed to the most sweeping Wall Street reforms in several generations will risk being punished by voters for appearing to support irresponsible bankers at the expense of Main Street. Senator McConnell and others had a private meeting in New York this week with hedge fund managers and their lobbyists. Democrats have since gleefully accused him of parroting Wall Street’s talking points. On yesterday’s evidence, he may have to find some new ones. READ MORE: http://www.commondreams.org/headline/2010/04/15
Climate Bill Would Curb EPA by Lisa Lerer April 14, 2010 by Politico.com
Efforts to limit the authority of the Environmental Protection Agency to regulate greenhouse gases has emerged as a major battleground in the climate debate, as three key senators move toward releasing the first draft of their revamped climate bill.
Recent drafts of the legislation would hobble the EPA by limiting the agency’s regulatory powers under the Clean Air Act, according to lawmakers and lobbyists familiar with the bill.
Sen. Lindsey Graham (R-S.C.), who’s crafting the climate bill with Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.), says the provision is necessary to win business backing for the bill.
“I wouldn’t support EPA regulation on top of congressional action, and I couldn’t support 50 states coming up with their own standards,” he said. “That’s one thing business legitimately needs.”
In response to concerns voiced by moderate Democrats, EPA Administrator Lisa Jackson announced that she expects the agency to weaken its proposed pollution standards and delay implementation of the new rules until 2011.
But Jackson also urged lawmakers to focus on passing a climate bill instead of on stopping the agency.
“We are not going to be regulating this calendar year, and I really think it would be wonderful if the energy of the Senate on this issue would be put to new legislation to do something,” she said. READ MORE: http://www.commondreams.org/headline/2010/04/14-2
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