‘Green Book’ and ‘Miss Daisy’ Fuel a Racial Fantasy. Mookie Knew Better.

By Wesley Morris

In many Oscar bait movies, interracial friendships come with a paycheck, and follow the white character’s journey to enlightenment.

…We’d all been reared on racial-reconciliation fantasies. Why can’t Mookie and Sal be friends? The answer’s too long and too raw. Sal can pay Mookie to deliver pizzas ‘til kingdom come. But he could never pay him enough to be his friend.

Wake Up the Banking Police

morgenson-thumbStandardDecember 14, 2013

The Volcker Rule has landed. Will the United States financial system be safer and sounder as a result?

That’s the goal, after all, of the almost 1,000-page document approved by banking, securities and commodities regulators last week. Years in the making, the rule is supposed to reduce the risks that a major bank will have to be rescued by taxpayers if some of its bets go bad.

The rule, named for Paul A. Volcker, the former Federal Reserve Board chairman, was supposed to be the 21st century’s answer to theGlass-Steagall Act, the Depression-era law that separated investment banks from their commercial brethren. To at least one financial historian, the emergence of the new rule last week was momentous.

“The passage of the Volcker Rule represents a step partway back to the Glass-Steagall regime that has historical significance for helping to give us four to five decades of relative financial stability from the 1930s to the 1980s,” said Richard E. Sylla, the Henry Kaufman professor of the history of financial institutions and markets at New York University. “Even if we don’t see a lot of actions against violators, the mere fact that the rule is on the books will make banks think twice before engaging in activities that might result in actionable violations.”

As a result, Professor Sylla said, “the financial system should become more responsible and safer.”

Let’s hope so.

Still, Mr. Sylla’s point about actions against violators raises perhaps the most crucial question surrounding this new rule. How assiduously will the regulators charged with enforcing it do their jobs?

We learned all too well during the lead-up to the recent financial crisis what happens when bank watchdogs snooze. There were plenty of regulations on the books that could have been enforced to rein in reckless lenders. But the police force was disengaged, or worse, protecting the institutions it was supposed to oversee.

Put simply, the success or failure of the Volcker Rule will depend upon the appetite of financial regulators to regulate. This is always the case, of course, with regulation. But it is particularly so with the Volcker Rule because some of its most important measures are open to interpretation.

Consider the exceptions to the rule’s ban on proprietary trading — the bets that a bank can make using its own money. Proprietary trading was what hammered JPMorgan Chase in the incident known as the London whale; curbing these types of transactions was central to the new rule and to protecting taxpayers from future bank bailouts.

But there are always exceptions to any rule. And in proprietary trading, the Volcker Rule makes an exception that relates to a bank’s liquidity management.

Liquidity represents a bank’s ready cash needed to meet its obligations. If an institution can meet these obligations without generating a loss, it’s considered to have sufficient liquidity.

Reading the rule is a tough slog through legal jargon. The bar on proprietary trading, for example, does not include “any purchase or sale of a security by a banking entity for the purpose of liquidity management in accordance with a documented liquidity management plan of the banking entity.”

If that’s not enough, the rule goes on to warn that these exempted transactions should exclude purchases “for the purpose of short-term resale, benefiting from actual or expected short-term price movements, realizing short-term arbitrage profits, or hedging a position taken for such short-term purposes.”

Are these exceptions big enough for the London whale to swim through? We don’t really know: It would be up to regulators to ensure that proprietary bets aren’t being improperly labeled liquidity management.

A second aspect of the rule granting financial institutions loads of leeway relates to their so-called market-making activities. These transactions are entered into by a bank but are ultimately for the benefit of its customers.

In this area, sayeth the rule: “The amount, types and risks of the financial instruments in the trading desk’s market maker inventory are designed not to exceed, on an ongoing basis, the reasonably expected near-term demands of clients, customers or counterparties.”

Someone will have to police whether a bank puts on a trade that it says is for market-making activities but in reality is a proprietary bet.

“You can drive a pretty large truck through that exception,” said David A. Skeel, a law professor and an expert in bankruptcy at the University of Pennsylvania Law School. As a result, he said: “The success or failure of the rule is really going to come down to what the bank regulators will do to enforce it. It can’t work unless it’s aggressively enforced, but it’s hard to imagine it’s going to be aggressively enforced.”

That’s hard to imagine because banking regulators are going to be the main enforcers of the Volcker Rule. For the most part (excepting the Federal Deposit Insurance Corporation), these are the very people who didn’t see the mortgage crisis bearing down on them. One reason: Where the big banks are concerned, the overseers often favor the overseen.

And yet regulators for the most part have not been held accountable for their woeful performance in the years leading up to the financial debacle. Instead, they have received even greater powers.

That no penalties have been exacted for the recent regulatory lapses means they are more likely to continue, Mr. Skeel said.

“If there were some sort of penalty for regulators who cross a boundary in failing to enforce the Volcker Rule, that would be interesting,” he said. “Even if there aren’t immediate obvious abuses, it would give you an opportunity to ask if there is any regulator whose job or pay ought to be in jeopardy because the rules aren’t being enforced.”

An intriguing idea. Just as the Volcker Rule is an opportunity to reduce the risks that big banks pose to taxpayers, it could also begin a discussion about regulatory accountability. That’s long overdue.


Published by The New York Times at

Big Pharma, the Budget Deal, Hillary, and Iran

handshake-with-money-006Big Pharma: Medicating Our Nation’s Capitol With Big Money
By Sanderson

…The amount pharmaceutical companies spent lobbying in 2012 was 2.6 billion dollars. This was more than was spent by combining the all of the amounts spent on lobbying activities by Big Oil, Gas, Defense, and Aerospace industries and all of their associates!…

As a direct influence of their lobbying Congress, laws have been passed which have allowed big pharmaceutical companies to monopolize the drug market on new prescription drugs for terms of up to 20 years or more….

Most of the new medications being researched and developed are occurring at the university level and being funded by the National Institutes of Health (NIH)…. So as we, the tax payers, pay for the R&D of new medication out of our own pockets, Big Pharm claims to have suffered the costs of R&D themselves, and then turns around and recharges those” ghost” costs to the consumer by way of charging exorbitant prices for the medication!…

In 2006, the United States Congress expanded our Medicare System to include a prescription drug benefit (Medicare Part D)…. So, not only did big pharmacy get a “huge new revenue stream from taxpayers,” but they could charge this new group whatever they wished for their brand-name drugs….

As a result of this symbiotic relationship between Big Pharma and the FDA, the common consumer is often blocked from hearing about natural food or supplements which can treat certain illnesses cheaper and with outcomes as good, if not better, than the Big Pharma drugs being patented by the FDA.


The Bipartisan Budget Deal and the Economy: The Beatings Continue
By Robert Borosage

The bipartisan budget agreement released late Tuesday is being celebrated, largely for showing that a deal is possible….

The deal was reached by give and take. Democrats defended Social Security and Medicare from cuts Republicans wanted. Republicans defended billionaires and multinationals from taxes that Democrats wanted. Democrats got some relief from short-term sequester cuts; Republicans got increased long-term deficit reductions. Democrats saved domestic programs from deeper cuts; Republicans saved military programs.

But what is the actual effect on the economy?

…Somehow Washington has failed to get the message. This deal doesn’t end the cutting; it only reduces its severity. It doesn’t generate jobs; it only cuts fewer of them. It doesn’t help the economy; it only reduces the harm to it.

Surely we can do better than that.


Lament of the Plutocrats
Why Wall Street is fed up with the White House—and Republicans too.

…Still, some say fears that Clinton will end up alienating financial sector donors the way Obama has, even if she tacks left, are overblown. “Wall Street folks are so happy about [having Clinton run] that they won’t care what she says,” says one well-placed Democrat….


Iran’s Hard-Liners Keep Their Criticism of Nuclear Pact to Themselves

For over a decade, Iran’s hard-line clerics and Revolutionary Guards … grew richer and more powerful, even as the country was increasingly impoverished by the sanctions….But if they do receive such a signal, the hard-liners have the money and means to mobilize a formidable opposition….

Inequality, Compassion, and Teamwork

Participation Inequality 90 9 1Does Rising Inequality Make Us Hardhearted?

This bifurcation – conservative in theory, liberal in practice – suggests that by using broad terms with liberal ideological connotations like “inequality,” “more widely shared” growth and “decreased mobility,” Obama risks activating voters’ “theoretical” conservatism, as opposed to a strategy that stresses specifics in non-ideological terms, a kind of practical liberalism: raising the minimum wage, raising tax rates on unearned income, job training, early education…. A switch to an ideology founded on redistribution, with economic justice as its core principle, would require a major upheaval, the likes of which we have not seen for some time.


New G.M. Chief Is Company Woman, Born to It

…Ms. Barra is hardly a flamboyant figure at the company. She is known inside G.M. as a consensus builder who calls her staff together on a moment’s notice to brainstorm on pressing issues….

In a commencement speech last summer to students at her alma mater, the G.M.-sponsored Kettering University in Flint, Mich., she summarized her inclusive management style. “Problems don’t go away when you ignore them — they get bigger,” she said. “In my experience, it is much better to get the right people together, to make a plan, and to address every challenge head on.”…

The Volcker Rule Is Finally Here (plus more)

4.2.12Volcker Rule Is a Puzzle That Will Take Years to Understand
By Rana Foroohar

…What I’d love to see is not only a Volcker rule that prohibits prop trading outright, but also tougher capital holding requirements for banks. It’s a little known but important fact that in the years around the financial crisis of 1929 and the Great Depression (from 1929 to 1932), lots of small and regional banks went under, but no major New York bank did. Why? Because these market makers were holding between 15 and 20 % equity capital on their balance sheets — about ten times more than the average today. Prohibiting prop trading would go a long way toward lowering those ratios.

For more on the Volcker Rule, click here.


Celebrations of Too Big to Fail’s Demise Are Premature
By Simon Johnson

In a major speech last week, Treasury Secretary Jack Lew argued that we need to keep pushing forward with financial reform. He made some encouraging points about the need to reduce systemic risks arising from money-market mutual funds and for appropriate funding levels at the Securities and Exchange Commission and the Commodity Futures Trading Commission, and he spoke clearly about the need for accountability of regulators and of bank executives. But a huge misconception in his remarks threatens to swamp everything.

Lew argued that the problem of “too-big-to-fail” banks is well on its way to being fixed.


Elizabeth Warren Responds To Third Way Attack By Asking Wall Street To Disclose Ties
By DSWright, FireDogLake

Senator Elizabeth Warren is not taking the attack on her by Third Way lying down. In an open letter to the CEOs of the Too Big To Fail Wall Street banks responsible for the financial crisis of 2008, Senator Warren asks that they disclose their connections to think tanks like Third Way. That way the public will know who is paying the bill for Third Way’s attack on Warren and those asking for economic justice….


Winning the War on War
by Joshua S. Goldstein

Preeminent scholar of international relations Joshua Goldstein tears down one of the greatest myths of modern history. Despite all the hand-wringing, fearmongering, and bad-news headlines, peace is on the rise. Fewer wars are starting, more are ending, and those that remain are smaller and more localized than in past years….


Peter Higgs: I wouldn’t be productive enough for today’s academic system
By Decca Aitkenhead

Peter Higgs, the British physicist who gave his name to the Higgs boson, believes no university would employ him in today’s academic system because he would not be considered “productive” enough.

Report: Half of U.S. Families Live on the Edge of ‘Economic Chaos’ (plus more)

cashregister-thumb-640xauto-9805Report: Half of U.S. Families Live on the Edge of ‘Economic Chaos’ 
by Imara Jones

Half of all families in the United States are poor, near poor or face economic insecurity where “one major setback in income could push them into poverty.” That’s the shocking conclusion of a report released today by The Hamilton Project.


Is Pope Francis Leaving Vatican At Night To Minister To Homeless?

…A knowledgable source in Rome told The Huffington Post that “Swiss guards confirmed that the pope has ventured out at night, dressed as a regular priest, to meet with homeless men and women.”


Is Wall Street Too Giddy?
The stock market reaches record highs as incomes stagnate. Tech companies with no revenue are valued in the billions of dollars. More analysts are seeing something unpleasantly familiar.

Are we in a stock market bubble that could soon burst?


‘TipsForJesus’ Is Leaving Thousands Of Dollars For Servers
By Mark Memmot

…TipsForJesus has been chronicling its good deeds on Instagram, saying its mission is “doing the Lords [sic] work, one tip at a time.” Gawker estimates about $54,000 has been handed out in the past several months.


Third Way’s Anti-Populist, Anti-Warren and Deceptive “Dead End”
By Richard Eskow

An almost palpable air of desperation clings to the anti-“populist,” anti-Elizabeth Warren editorial by Jonathan Cowan and Jim Kessler of the corporate-funded Third Way organization. If they’re worried, they’re right to worry. The world is changing.


Rumsfeld’s War and Its Consequences Now
By Mark Danner

A review of:

The Unknown Known
a film directed by Errol Morris

Known and Unknown: A Memoir
by Donald Rumsfeld
Sentinel, 815 pp., $36.00

By His Own Rules: The Ambitions, Successes, and Ultimate Failures of Donald Rumsfeld
by Bradley Graham
PublicAffairs, 803 pp., $18.95 (paper)


’Tis the Season to Be Food-Insecure

It is a strange and ironic truth that in the world’s richest democracy, many Americans are going to work in the morning, but they and their families are going to bed hungry at night.


Homage to the Idols of Idleness

…What could be gained from a single day set free from the clock’s tyranny, one spent wandering or daydreaming the hours away?


The Stem and the Flower

…How much emotional and psychic space should politics take up in a normal healthy brain?… politics should take up maybe a tenth corner of a good citizen’s mind. The rest should be philosophy, friendship, romance, family, culture and fun. I wish our talk-show culture reflected that balance, and that the emotional register around politics were more in keeping with its low but steady nature.


The Families We Invent

…As good as we humans are at division, we’re better still at connection.


The Pope and the Right

…This Catholic case for limited government, however, is not a case for the Ayn Randian temptation inherent to a capitalism-friendly politics. There is no Catholic warrant for valorizing entrepreneurs at the expense of ordinary workers, or for dismissing all regulation as unnecessary and all redistribution as immoral.

The Ways of Lust (plus more)

lustThe Ways of Lust

HOW does lust affect the way we think about people? …The real worry that people have with pornography — and with lust more generally — is that the targets of the arousal are seen as losing certain uniquely human traits. They are thought of as lower-status beings, stripped of dignity, more like animals than people….


The G.O.P.’s Racism Tweet

It took three-and-a-half hours for the Republican National Committee to amend a tweet.


The Minimum We Can Do

…individuals are often willing to sacrifice their own payoffs to punish those who are seen as acting unfairly…. Support for increasing the minimum wage stretches across the political spectrum.

Pope Challenges Unfettered Capitalism (plus more)

Pope Francis leads a mass at St Peter's basilica

John Francis Callahan shared this on Facebook:

Pope Francis calls unfettered capitalism ‘tyranny’ and urges rich to share wealth

Pontiff’s first major publication calls on global leaders to guarantee work, education and healthcare



Rob Waters posted this to Facebook:

My latest in Forbes: New series profiles healthcare innovators working to transform their communities


 End the N.S.A. Dragnet, Now

By Ron Wyden, Mark Udall and Martin Heinrich

…In spite of our repeated requests, the N.S.A. has not provided evidence of any instance when the agency used this program to review phone records that could not have been obtained using a regular court order or emergency authorization….


 A Little Light in the Dark Corridors of Power
By Jeff Fauz

…Now comes Larry Summers — one of the chief designers of the policies that led to our current economic morass — suggesting in a November 8 speech to the International Monetary Fund that this fundamental assumption does not square with observed reality….

Whether through intention or ignorance, lower wages or another unsustainable bout of speculation are the logical consequence of the bi-partisan commitment to austerity that now rules Washington.

It is difficult to believe that many in Summers’ audience at the IMF do not understand this. But the policy implications — i.e., actually doing something about the trade deficit, the misallocation of capital and the corporate war against workers — are too radical for the financial interests that support their careers….