Prairie Weather

Because the alternative could have been much, much worse

I agree with Joshua Green, awkward though going against the prevailing "wisdom" is.  TARP helped.  It didn't help everyone and that's an important consideration.  But there are good reasons to believe it helped make things better, and not just for the banks.  The last thing we needed, as the system crashed around us, was a "principled" do-nothing stand against Wall Street. 

TARP was brought into play at a time when we were risking a huge economic disaster along with banks falling over like dominoes right across the world.  TARP is unpopular because the tea party says it's bad.  But we talking about a group that thrives on nuttiness and fantasy.  Ironically, it's funded by libertarians and libertines with close ties to big money.  Go figure.

Green writes:

All the big Wall Street banks have fully repaid the government with interest. To date, taxpayers' profit from these banks stands at around $26 billion. Small banks still hold about $20 billion from TARP, but this, too, is likely to be repaid with a profit. The government also invested $50 billion in GM, which the automaker will begin repaying after its initial public offering in November.

Not every TARP program over-performed. The $50 billion mortgage-modification effort -- money never expected to come back -- mostly failed. But even this has proved perversely economical, since the program won't draw its full allotment.

The Congressional Budget Office recently lowered its estimate of what TARP will cost taxpayers to $66 billion. With interest, dividends, anticipated profits, and the unexpectedly small commitment to housing -- not all reflected in the CBO's conservative estimate -- it is possible to envision an outcome in which TARP costs little or nothing.

That's good news for taxpayers -- but they probably won't learn about this surprising bipartisan achievement from elected officials, who long ago judged any association with TARP as deadly.

Testifying before Congress last week, Treasury Secretary Tim Geithner gently tweaked lawmakers for flip-flopping. "A lot of people who voted for TARP decided later that they had to distance themselves from that vote by disparaging the program,'' he said. "But I think they should be proud of the votes they cast. They were on right side of history.'' Politically that sounds nuts, but the numbers back it up.

Economists will tell you that's not the whole story, that there are "troubled assets" out there that are bound to make big trouble for banks and all of us. 

But that's a problem we've allowed to continue.  We have accepted "too big to fail."  You haven't, and I haven't.   But the political system has accepted it, and the rest of us seem to be lying down in front of that bulldozer.  Why are so many targeting TARP when the real target should be watered down regulations?  

For the time being, the corrupt old system is up and running, at least "trickle down" is likely to resume, we are edging our way out of a de-recession and (if we ever get our political act together) we can change things so we never have to throw a TARP over our collective sins again.

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ProPublica has a different view of TARP.

"Because the alternative is worse"

David Plouffe started out strong this morning in an hourlong interview at NPR.  By midpoint, however, his defense of the administration got muddled and now, as the interview ends, he is urging votes for Democrats because the "alternative will make these problems worse."

It's not that he's wrong.  It's that he's ...reaching for something and not getting it.

First GMAC, now JP Morgan

In every way, the dirty dealing on the part of the mortgage industry and subsequent foreclosures are examples of just how far Wall Street has fallen.

First, GMAC ten days ago.

GMAC Mortgage said it told some of its outsourced vendors to suspend evictions and REO closings on some foreclosures.

These foreclosures have been held up by challenges to GMAC’s internal procedures for executing judicially required forms, the company added. GMAC has been dealing with the problem for more than three months. 

 Now JP Morgan.

At the center of the controversy are employees of mortgage lenders or servicers who sign affidavits supporting foreclosures that have to be cleared by judges in many states.

With so many foreclosures to process, there’s concern that such affidavits are signed without verifying whether loan documents and other records have the correct information. The integrity of the process is a key component in how judges decide that people’s houses can be taken and given back to the bank.

Dustin Zacks, an attorney at Ice Legal PA — a firm based in Royal Palm Beach, Fla., that specializes in foreclosure defense — is representing some homeowners who are trying to stop their houses from being seized through foreclosure.

Zacks said he deposed a Chase document signer called Beth Ann Cottrell who said she and eight others in her department signed about 18,000 foreclosure-related documents a month, including affidavits of indebtedness.

“Our first question was whether she had personal knowledge of the documents she was signing about,” Zacks said in an interview. “Her answer was no. It’s shocking that they would use this as evidence to seize someone’s property.” 

The New York Times sees it as a "sign that the entire foreclosure process is coming under pressure."  But we've seen banking systems come under pressure before.  We've seen the systems opened up for view and the revelations are usually horrific.  But we don't see a follow-up.  Heads are banged in a committee hearing in Congress and then the bankers climb back into the jets and head back to Manhattan.

How many foreclosures will turn out to have been illegit?  Plenty. How many homeowners will be made whole again?

Yeah, right...

One Texas Republican motormouth ends net neutrality

It's pretty stunning.  The Washington Post reports that Henry Waxman has been stymied in his effort to push a net neutrality bill through the House.  The game was declared over by Joe Barton, the guy who loves corporations.  Like, remember Barton's efforts to defend BP?  Lately it's been broadband networks.

Rep. Henry Waxman (D-Calif.) confirmed Wednesday afternoon that his net neutrality bill was effectively scrapped after Rep. Joe Barton (R-Tex.) declined to support the legislation.

In a statement, Waxman urged the Federal Communications Commission to reassert its authority to regulate broadband access providers. Doing so would allow the FCC to create its own net neutrality rules -- an effort that was thrown into doubt when a federal court ruled the agency overstepped its authority by sanctioning Comcast for allegedly violating broadband rules.

Waxman said he and his staff had worked with public interest groups, Internet service providers and Web content companies to try to reach an agreement around a bill that all parties could support. Waxman, chairman of the Energy and Commerce Committee, said he had also kept Republican members on the committee abreast of his work. He said it was essential to gain Republican support for the bill.

"With great regret, I must report that ranking member Barton has informed me that support for this legislation will not be forthcoming at this time," Waxman said in a statement.

"This development is a loss for consumers and a gain only for the extremes...."

And that's pretty much it.  Game over.

Democrats bend over

Senate Democrats agreed Wednesday night to a Republican demand ...

Democratic leaders have agreed ...

Democrats agreed earlier in the day to a Republican demand ...

What's all this about Democrats "agreeing" with Republican demands as Congress closes up shop until the election? Any doubts now about why Democratic voters are not eager to fund and vote for Democrats?

The Hill reports it's all part of a package containing no gifts for Democrats.

It's about denying the president the opportunity to make recess appointments during the time Congress is back home campaigning.  Why would Democrats agree to such a deal?

Under the law, the president can only make a recess appointment if the Senate is adjourned for more than three consecutive days.

By scheduling pro-forma sessions on Mondays and Fridays, lawmakers can take away Obama’s ability to make recess appointments.

Obama had 115 executive- and judicial-branch nominees pending on the Senate’s executive calendar as of Wednesday afternoon.

Republican Leader Mitch McConnell (R-Ky.) had threatened to send Obama’s most controversial nominees back to the president if Democrats did not agree to schedule pro-forma sessions, according to a senior GOP aide.

Senate rules give McConnell this power.

That would have forced the president to resubmit the nominees to the Senate and Democrats to start their confirmation processes (including hearings) all over again.

Next question:  how did Democrats allow Mitch McConnell to accumulate the kind of power that makes these moves possible?  Well, for a start McConnell is taking advantage of every obscure rule the Senate has to block fellow senators and the president and the Democrats were and are in disarray.

Senators rarely invoke this rule, but McConnell threatened to object unless Democrats agreed to prevent Obama from making recess appointments.

I still don't get why Democrats agree to bend over so frequently and obscenely.  Or why, given all this, there is such surprise and terror within the Democratic party structure at the sight of Democratic voters drifting -- even galloping -- away from the DLC party.

Dems lose Soros and other big donors

“Mr. Soros believes that he can be most effective by funding groups that promote progressive policy outcomes in areas such as health care, the environment and foreign policy,” said an adviser, Michael Vachon. “So he has opted to fund those activities.”

But not the Democratic party.  Which leaves the terrain wide open to huge Republican donors, according to a report in the Times. 

In the last week, Republican-leaning groups outspent their Democratic counterparts on television by more than seven to one on Senate races and nearly four to one on House races across the country, according to data from the Campaign Media Analysis Group, which tracks political advertising. The gap shows few signs of abating, even with the midterm election season in full swing.

Meanwhile, President Obama is encountering some well-aimed barbs from supporters in his "backyard" and "town hall" rallies, according to NPR.  While people agree his long-term goals are laudable, they are flummoxed by the apparent lack of attention to foreclosures and matters of immediate concern to voters.

The Citizens United ruling has turned into a double-whammy against Democrats.

It also appears, however, that Republicans have outmaneuvered their Democratic counterparts since the Citizens United decision. They have taken advantage of Democratic broadsides against the ruling, which have inevitably had an effect on the attitudes of Democratic donors.

Mr. Obama devoted one of his weekly radio addresses this month to the effect he said untamed special interests were having on the midterm election. “We can see for ourselves how destructive to our democracy this can become,” he said. “We see it in the flood of deceptive attack ads sponsored by special interests using front groups with misleading names.”

Several Democratic strategists said the White House’s denunciations had made entreaties to prospective donors trickier.

New donor groups are springing up but not in time, it is generally believed, to save the Democrats in this election cycle.