Posts Tagged ‘Bank of America’

Mining Right Wing Critiques for Some Honesty

Wednesday, October 21st, 2009

I’ve gotten tired of being outraged at every self-serving lie and every new line crossed and picking apart idiotic arguments by right wingers. This served some purpose during the campaign – and I believe it is important to do when disinformation campaigns are being waged (as during August of the health care debate). But it is not what I feel most comfortable doing.

At the same time, I believe Republicans are undermining the two-party system and our democratic institutions by using their considerable clout to promote fantastical claims and lies about the efforts of their opponents instead of engaging in more pragmatic or fair-minded criticisms. Right wingers who back the Republicans have likewise mainly fallen into this trap – aside from a few notable exceptions (Ross Douthat, Reihan Salam, David Frum, Bruce Bartlett, David Brooks.)One of my goals then will be to not only promote these individuals – as Andrew Sullivan for example is – but to read the propagandist crap from more mainstream right wingers and mine it for legitimate criticism.

I’ve had this thought in my head for a few weeks – and have been reading wit this in mind. But when reading items like this by Steve Huntley in the Chicago Sun Times, it becomes very difficult:

Someone’s brain is clearly addled – for there is nothing contradictory about claiming you inherited the worst economy since the Great Depression (which it technically was) and that it is even worse than was thought (especially as several weeks after Biden’s remark, the Department of Commerce released the official statistics revising its statistics down for the past year as it periodically does.)

It amazes me that such paragraphs get past an editor.

Other concerns – while perhaps legitimate – are so self-serving they are hard to reconcile with past views. For example, Wesley Smith over at National Review‘s The Corner did not from my reading of him bring up the subject of the “rule of law” at all during George W. Bush’s presidency. However, now he brings it up with a hard criticism of the Obama administration’s position on medical marijuana:

Part of the sleight of hand here is a subtle mischaracterization of the change. Obama is not “refusing to enforce federal marijuana laws” but rather shifting resources away from targeting these groups, or as Devlin Barrett of the Associated Press described it, prosecutors will be told that “it is not a good use of their time to arrest people who use or provide medical marijuana in strict compliance with state law.” And Smith doesn’t acknowledge the long tradition (he refers only to Andrew Jackson) of presidents refusing to enforce laws as part of the checks and balances described in most textbooks on the Constitution. Smith also ignores the far more serious violations of the rule of law that Bush committed in actually ordering the law be broken and declaring it void when it violated his duty to protect Americans.

This sudden concern for the rule of law – concern suggesting it was incredibly fragile and can be destroyed in an instant – seems to reinforce the point I made earlier – that the strong positions taken by conservatives regarding curbing executive power and discretion are entirely unprincipled. They have everything to do with the fact that a liberal is now in power and will be abandoned again when they have power.

However, I did find one conservative critique I could endorse: Marie Gryphon’s piece in the National Review that makes the case against scapegoating Ken Lewis of Bank of America. To blame him for accepting the deal he did – especially given the amount of pressure he was under from Hank Paulson, Ben Bernanke, and those working with them is ridiculous. Whether or not there is a legal case against him, it should not be pursued.

Why It’s A Good Sign That Byron Trott Is Leaving Goldman Sachs

Tuesday, March 31st, 2009

Though the articles about investment bankers leaving the big firms to start up their own smaller, competing firms seem to be trying to suggest that this is a bad thing – I find it hard to see it as anything but good. For example, an article in today’s Wall Street Journal by Heidi N. Moore and Scott Patterson suggests Byron Trott is leaving Goldman Sachs to start his own firm because of caps “on executive pay and calls for tighter regulation” on large banks. Byron Trott is significant because he is Warren Buffett’s favorite investment banker – but the article also suggests he is part of a larger trend. 

This strikes me as an almost unalloyed good. If banks like Golman Sachs, Citibank, Bank of America, JPMorgan Chase, etcetera are too big – and if the government isn’t going to break them up – then this draining of talent and resources into smaller firms run by highly competent former members of these organizations seems like the next best thing. Hopefully, this will help defuse the centralization of power and money in a few big firms which is one of the major factors that led to this crisis. 

Simon Johnson and others have argued that we need to break up these banks that are too big to fail:

Anything that is too big to fail is too big to exist.

My thought is that this might be accomplished with less political capital and more “naturally” in a market-driven approach that simply imposed regulations and costs on institutions that are “too-big-to-fail” that would serve to drive individuals to set up smaller companies.  At institutions that are too big to fail, there should be, for example, a fee similar to that paid to the FDIC by banks to finance the protection given to them. At the same time, pay – rather than being capped at a particular hard amount – should be forced to be tied to long-term results to avoid drastic short-term risk-taking; I’m sure there are other ways out there to limit pay without imposing caps. And of course, regulations should ensure that an appropriate amount of capital is available to handle any leveraged risks.

Even if this market-driven approach is not sufficient, the steps taken so far are at least moving people in the right direction.

Banksters

Monday, February 2nd, 2009

The BBC proposes reintroducing a word from the 1930s into the current lexicon: bankster.

Readers of the blog – and friends of mine – know that I have a deep and abiding hatred of the Bank of America. Of course, this hatred was based on my own personal experience with that sorry institution. I did not know the back story – of a poor immigrant who used his bank to build a community, who financed the Golden Gate Bridge and Snow White and the Seven Dwarfs, who refused pay increases or bonuses, who helped rebuild San Francisco after the great earthquake of 1906. This only makes me despise even more the institution that grew from this good bank – which perverted the bank Amadeo Peter Giannini founded.

Holding a Grudge Against the Bank of America (Part 1)

Friday, August 22nd, 2008


[Photo by Steven Rhodes licensed under Creative Commons.]

Corporations are considered individuals by the law. Yet they have no conscience to guilt; they have no eternal soul to damn1; they have no empathy, no compassion – no emotion of any sort; they cannot be sent to prison; they can live forever; their single purpose is to make money – and they are legally obligated to make as much money as possible. Yet despite the fundamental differences between corporations and human beings, corporations have been given all of the rights of human beings. They have the right to free speech, the right to assemble, the right to be free from unreasonable searches and seizures – and all those other rights we mere humans take for granted.

Is it any wonder then that all large corporations – once they are no longer the responsibility of a single individual – begin to act as if they have no conscience or compassion – exploiting legal loopholes and damaging society at large? Insurance companies derive enormous profit from denying legitimate claims and every claim that they possibly can. Oil companies lobby and erect barriers and do anything they can to eliminate the possibility of alternative energy sources being developed. Manufacturers externalize the costs of their pollution – spewing toxic chemicals into streams and lakes and the air and the ground – and after paying some negligible penalty, the government (with the people’s money) takes responsibility for cleaning up the mess.2 Big lenders and bankers take unwise risks that allow them enormous profits in the short term – and the American people then pay to bail the companies out of the deficits they find themselves in.3

The companies survive – they thrive. It is the people who work for them and who are their customers – the people that are fired, and the people that get sick, and the people denied coverage. Then to top it all off – it is these same people who have to pay when companies that are too big to fail end up failing due to their own recklessness.

I don’t believe that corporations are inherently good or inherently evil – they are tools that are used for many purposes. But when we discuss economics and public policy it is essential that we acknowledge the limits of corporations. This inevitably leads to certain positions:

  • If corporations, by their nature, attempt to externalize as many costs as possible – forcing problems onto the public such as pollution – then government regulation is necessary to force corporations to deal with these externalized problems.
  • If corporations have no conscience or compassion, we cannot necessarily trust them to take care of us in times of need. Although random acts of kindness and charity occur more often than is sometimes acknowledged, they do not change the scope of the problem.
  • If corporations do not take affirmative steps to protect public goods and institutions – such as the national infrastructure, education, political institutions, and the nature of our society – someone must. Today, corporations are radically altering our society on many fronts – and as such they are a threat to its cohesiveness – by encouraging mass immigration and sexual immorality from a conservative perspective, and by creating vast inequities between the rich and everyone else from a liberal perspective.

Liberals, progressives, and Democrats have come to a broad agreement in recent years on some general steps that need to be taken to protect our economy and our country in an increasingly globalized world. (Some deeper critiques and potential solutions from a liberal perspective can be found in William Greider’s The Soul of Capitalism.)

This includes raising the tax rates on those making over $250,000.00 a year and on corporations to the same rates as at the end of Bill Clinton’s term; focusing on developing a clean energy industry to replace traditional manufacturing; increasing funding for infrastructure maintenance and development; protecting the foundations of the internet through net neutrality; and taking various steps to reform our educational and health care systems. (A thoughtful piece in this weekend’s New York Times by David Leonhardt delves into Obama’s economic worldview.)

Health Care

The best insight into the Democratic consensus on these issues comes from the issue of health care.

Barack Obama has said that if he were to design a health care system from scratch, the system would be single-payer. At this time, however, Obama believes we need to work within the system that we have. As with most issues, what Obama proposes here is to tinker with the current system to try to reduce the problems immediately and gradually move towards a better solution. On health care, this means working with the current employer-based system – and creating incentives to reduce the number of people not covered. These incentives incude a mandate for children, tax incentives for those who seek their own health insurance, penalties for large companies that do not provide health insurance (in the form of payroll taxes), the expansion of existing programs, and support for small businesses to assist them in providing health care for their employees.

In addition to the above and more short-term solutions, Obama proposes to open up the health care plan used by members of Congress to the public – and to create a “National Health Insurance Exchange” focused on assisting people who wanted individual or family insurance plans while providing rules and guidelines for participating companies. In the long-term these two changes have the potential to remake the field of health care. If the government program is able to provide better services for less cost than it’s competitors, then if the market works as it should, more and more people will move over to the government plan – unless other health insurance companies are able to take steps to compete.

This combination of freedom of choice for citizens/customers, government regulation for companies wishing to get into a potentially lucrative market, government competition against private companies, and letting the market decide who wins in the long-term – this combination may be too clever to work. But it has far more potential than the giveaways to health insurance companies that the Republicans are proposing.

What does all of this have to do with holding a grude against the Bank of America?, you might ask. That’s coming up in Part 2.

  1. if you go for that sort of thing []
  2. Much of the analysis and examples given in these first two paragraphs is inspired by The Corporation by Joel Bakan – as well as the documentary of the same name. I do not entirely accept the conclusions of the film or book, or the methods they use to come to their conclusions. The book and the film are both extremely useful and worthwhile but are ultimately limited because they are polemics that do not seek to give a fair analysis but to persuade. Sometimes, the tools they use to persuade are a bit too blunt – as when in the documentary, the filmmakers say that the corporation as a type of instituition was responsible – in part presumably – for the Holocaust and other atrocities – when it is easier to blame “the government as an institution.” As a matter of fact – most of the criticisms of “the Corporation” can be equally applied to the State as an institution. []
  3. This is obviously references specifically the Fannie Mae, Freddie Mac, and Bear Stearns deals which the Financial Times of London called the most deceitful kind of socialism. []