A major new report from Bloomberg, drawn from nearly 30,000 pages of Fed documents obtained via FOIA, sheds some new light on why Congress' response to the too-big-to-fail problem in financial markets was legislation that allowed the biggest banks to grow even bigger. According to the report, the Federal Reserve and big banks worked in concert throughout the financial crisis to manipulate investors, regulators, and lawmakers by covering up trillions of dollars in Fed loans and guarantees while simultaneously lying about being healthy. As Bloomberg puts it: "While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger."Read Full Article
When Congress comes back next week, they're not going to move directly to the Obama jobs bill. Instead, they're going to take up a different measure that could potentially lead to U.S. job creation and is more likely to pass -- the Currency Exchange Rate Oversight Reform Act of 2011.
The bill is designed to give the Administration authority to take corrective action against artificially undervalued foreign currencies, particularly the Chinese renminbi. It is widely believed that the fair market value of the renminbi is being supressed by the Chinese government in order to give them an advantage in foreign trade. According to a new report from the Economic Policy Import, the U.S. trade deficit with China has killed 2.8 million American jobs since 2001. It's likely that many of those job positions, which were in manufacturing, could be recreated if the renminbi were valued more fairly.Read Full Article
The Committee of Veterans' Affairs yesterday voted in favor of reporting legislation to expand collective bargaining rights for health care workers at the Department of Veterans Affairs. The bill would amend a section of U.S. law that Democrats say the Veterans' Department is misusing to block certain VA health workers from negotiating over basic pay issues, like overtime, weekend pay, and physician incentive pay.Read Full Article
The Senate last night voted on a financial reform amendment that, although probably never having a real shot at passing, gives us a unique chance to see in the stark relief the divisions in both parties on truly reining in the "too big to fail" banks.
The amendment, a version of the SAFE Banking Act sponsored by Sens. Sherrod Brown [D, OH] and Ted Kaufman [D, DE], would have placed strict size caps on banks and non-bank financial companies. In practical terms, it would have forced the breaking up of some of the Wall Street corporations. Instead of consolidating like they have been doing for the past 20 years, banks like Bank of America and Chase would have been forced to sell some of their branches off to smaller regional banks over a period of three years.Read Full Article
There has been an ongoing partisan spat in the Senate recently over whether or not the financial reform bill as prepared by Sen. Chris Dodd [D, CT] would actually end bailouts. Politifact has shown that Minority Leader Sen. Mitch McConnell's [R, KY] statement that the bill "actually guarantees future bailouts of Wall Street banks" is false, but there is more ambiguity over whether the resolution authority provision in the bill is actually strong enough to guarantee that there will never again be bailouts of too-big-to-fail banks.
Sens. Sherrod Brown [D, OH], Ted Kaufman [D, DE], Bob Casey [D, PA] and Sen. Sheldon Whitehouse [D, RI] today announced that they are proposing legislation that I think everyone can agree would end once and for all the problem of having to bailout failing banks that are too big to fail.Read Full Article