Wall Street Escalates Bonus Schedules Amid Tax Hike Fears

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Tax Fear May Move Bonuses Earlier


Congress is debating tax rates, and that has Wall Street nervously eyeing the calendar.

Worried that lawmakers will allow taxes to rise for the wealthiest Americans beginning next year, financial firms are discussing whether to move up their bonus payouts from next year to this month.

At stake is a portion of the hefty annual payouts that are a familiar part of the compensation culture on Wall Street, as well as a juicy target of popular anger. If Congress does not extend the Bush-era tax cuts for the highest income levels, a typical worker who earns a $1 million bonus would pay $40,000 to $50,000 more in taxes next year than this year, depending on base salary.

Goldman Sachs is one of the companies discussing how to time bonus season, according to three people who have been briefed on the discussions. Pay consultants who work with major Wall Street companies say that just about every other large bank has also considered such a move in recent weeks.

With tax politics in Washington unpredictable, bank executives have spent months sketching out several options for their bonus plans, including the possibility of an earlier payout. Lawmakers have been trading accusations across a partisan divide, but after this weekend, it appears likely that a compromise will extend the tax cuts for all income levels.

Even so, the banks’ discussions about bonus timing underscore how focused the industry is on protecting every dollar of pay.

A spokesman for Goldman declined to comment. Bonus payouts are traditionally shrouded in secrecy; companies are required to disclose their top executives’ pay, but they do not disclose the size of their total bonus pools in their public filings or internally.

Goldman, not surprisingly, is the canary in the coal mine. It often announces its top executives’ bonuses before other firms, and the richness of its payouts sets the tone across the industry.

This year the tax debate has imposed a new wrinkle, and executives at two large banks said their companies tentatively decided not to speed payouts, unless Goldman did. Then, these two executives said, they would consider paying early as a competitive measure, so that their workers were not upset.

These executives and the people briefed on the Goldman discussions spoke only on the condition of anonymity.

Bonus timing is also being discussed at scores of public companies, beyond banks, for top executives who receive multimillion-dollar payouts around the turn of the year. At most companies outside the financial sector, an early bonus would help only a handful of executives, while on Wall Street, the benefit would apply to many more workers.

“This has been a topic of conversation among those of us who are involved in designing and administrating compensation plans,” said Brian Foley, a pay consultant in White Plains, N.Y. “But I really would be surprised if anyone went down this path. This is a bounce-back year in terms of bonuses going up and probably not the time to draw attention to yourself.”

Wall Street firms pay out billions of dollars in bonuses each year. In good years top executives can receive bonuses worth tens of millions of dollars. Even midlevel financial workers often earn above $250,000 a year, and they receive most of their compensation as bonuses paid early in the new year.

Extending the tax cuts for all Americans with taxable income over $250,000 for joint filers ($200,000 for single filers) would cost the country about $40 billion next year, according to the Joint Committee on Taxation, and it would cost $700 billion over the next decade.

Currently the highest rate for taxable income is 35 percent; that would increase to 39.6 percent if the Bush tax cuts expire this year.

The top five Wall Street firms have put aside nearly $90 billion for total pay this year, and they are expected to raise that amount using their end of year earnings. That would make this year one of the best ever for bank pay.

As Mr. Foley said, much of the focus within banks is on the appearance of the payouts. Several senior banking executives received either no bonuses or modest ones in recent years, and with the taxpayer-financed bailouts receding, top executives are pushing to be paid well again.

Some compensation consultants have been helping their clients devise new labels for the pay that are less likely to inflame the public. For instance, some banks are considering reducing the amount of their payouts that are labeled as bonuses, and instead shifting some to other categories like “long-term incentives.”

Depending on how banks structure this part of the payout package, it might not represent much of a change for bankers, since it has long been standard practice to tie up some pay for a few years for retention purposes. But, some bankers said, the goal was to make the dollar amounts appear less offensive.

Bankers are also discussing speeding up the way they award company stock. Many banks pay a substantial portion of bonuses in stock, rather than cash, and companies often have a multiyear delay between when those shares are awarded and when the employees can sell them. The tax bill does not come due until employees sell the shares, or own them outright.

Robert J. Jackson Jr., a professor at Columbia Law School who helped oversee the Treasury Department’s rules on compensation at bailed-out companies, said he would look carefully at footnotes in company filings to see if they accelerated executives’ stock awards. “Even companies who pay in stock instead of cash can structure it to be taxed at this year’s rates,” Mr. Jackson said. “If it does happen, it may be a little tricky to see.”

It is not uncommon for Wall Street to consider the tax consequences of its pay practices. Private firms like hedge funds often let workers choose when they’re paid. And until about a decade ago, Goldman allowed its partners to decide whether they received their bonuses in December or January. Back then, Goldman was an investment bank, and like other former investment banks, it closed its books at the end of November, making it easier to pay earlier.

One of the challenges for the banks in paying bonuses early would be coming out with exact amounts before the year is over and before they determine their final earnings — a lengthy process. Banks have in the past found ways to get around rules, or make their workers’ pay look lower than it actually was. For instance, a year ago Goldman capped the pay of all of its London workers at £1 million each.

But last summer, Goldman made it up to its partners in Britain, albeit quietly. The bank made dozens of multimillion-dollar stock grants to its partners there, according to a person briefed on their pay. Credit Suisse, in similar form, paid its British bankers summer cash bonuses to make up for their lower pay last year.


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Sources: Meet The Press, MSNBC, NY Times, The Young Turks, Youtube, Google Maps

Obama Pitches For Health Care & Financial Reform...Weekly Address

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Sources: Whitehouse.gov, MSNBC

Obama Finally Lets Finance Whiz Paul Volcker Spread His Wings

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Obama's "Volcker Rule" Shifts Power Away From Geithner


For much of last year, Paul Volcker wandered the country arguing for tougher restraints on big banks while the Obama administration pursued a more moderate regulatory agenda driven by Treasury Secretary Timothy F. Geithner.

Thursday morning at the White House, it seemed as if the two men had swapped places. A beaming Volcker stood at Obama's right as the president endorsed his proposal and branded it the "Volcker Rule." Geithner stood farther away, compelled to accommodate a stance he once considered less effective than his own.

The moment was the product of Volcker's persistence and a desire by the White House to impose sharper checks on the financial industry than Geithner had been advocating, according to some government sources and political analysts. It was Obama's most visible break yet from the reform philosophy that Geithner and his allies had been promoting earlier.

Senior administration officials say there is now broad consensus within the White House and the Treasury for the plan advanced by Volcker, who leads an outside economic advisory group for the president. At its heart, Volcker's plan restricts banks from making speculative investments that do not benefit their customers. He has argued that such speculative activity played a key role in the financial crisis. The administration also wants to limit the ability of the largest banks to use borrowed money to fund expansion plans.

The proposals, which require congressional approval, are the most explicit restrictions the administration has tried to impose on the banking industry. It will help to have Volcker, a legendary former Federal Reserve chairman who garners respect on both sides of the aisle, on Obama's side as the White House makes a final push for a financial reform bill on Capitol Hill, a senior official noted.

Advocates of Volcker's ideas were delighted. "This is a complete change of policy that was announced today. It's a fundamental shift," said Simon Johnson, a professor at MIT's Sloan School of Management. "This is coming from the political side. There are classic signs of major policy changes under pressure . . . but in a new and much more sensible direction."

Industry officials, however, said they were startled and disheartened that Geithner was overruled, in part because they supported the more moderate approach Geithner proposed last year.

"His influence may have slipped," said a senior industry official who spoke on the condition of anonymity to preserve his relationship with the administration. "But you could also argue that it wasn't Geithner who lost power. It's just that the president needed Volcker politically" to look tough on big banks.

Geithner agreed with Volcker that banks' risk-taking needed to be constrained.

But through much of the past year, Geithner said the best approach to limiting it is to require banks to hold more capital in reserve to cover losses, reducing their potential profits. Geithner said blanket prohibitions on specific activities would be less effective, in part because such bans would eliminate some legitimate activity unnecessarily.

The shift toward Volcker's thinking began last fall, according to government officials who spoke on the condition of anonymity because the deliberations were private.

Volcker had been arguing that banks, which are sheltered by the government because lending is important to the economy, should be prevented from taking advantage of that safety net to make speculative investments.

To make his case, he met with lawmakers on Capitol Hill and gave numerous speeches on the subject, traveling to at least nine cities on several continents to warn that banks had developed "unmanageable conflicts of interest" as they made investments for clients and themselves simultaneously.

"We ought to have some very large institutions whose primary purpose is a kind of fiduciary responsibility to service consumers, individuals, businesses and governments by providing outlets for their money and by providing credit," he said during one speech in Toronto. "They ought to be the core of the credit and financial system. Those institutions should not engage in highly risky entrepreneurial activity."

Gradually, Volcker picked up allies. John Reed, the former chairman of Citigroup, expressed his public support. So did Mervyn King, governor of the Bank of England.

His ideas began gaining traction within the administration in late October, when the president convened a meeting of his senior economic advisers in the Oval Office to hear a detailed presentation by the former Fed chairman.

There was no immediate change of course. But after the House passed a regulatory reform bill on Dec. 11 that was largely based on the Geithner's vision, the administration began to warm to Volcker's ideas, which had the political value of seeming tough on Wall Street, said sources in contact with the Treasury and White House.

At the time, administration officials were growing concerned that government guarantees designed to spur lending by letting banks borrow cheaply were instead funding banks' speculative investments and fueling soaring profits, said Austan Goolsbee, a member of the president's Council of Economic Advisers.

"We started coming out of the rescue and you saw some of the biggest financial institutions . . . who had access to cheap financing . . . use that money without lending or anything, just doing their own investments," he said. "That clearly started putting [the issue] on the radar screen for us."

Goolsbee said that Vice President Biden became a particular advocate for Volcker's approach.

In mid-December, the president formally endorsed Volcker's approach and asked Geithner and Lawrence H. Summers, the director of the National Economic Council, to work closely with the former Fed chairman to develop proposals that could be sent to Capitol Hill. The three men had long discussions about the idea, including a lengthy one-on-one lunch between Geithner and Volcker on Christmas Eve.

Summers and Geithner had been reluctant to take on battles that weren't at the heart of the problem that fueled the crisis. But ultimately, an administration official said, the two men concluded that reform needs to be about more than just fighting the last war -- it needs to address sources of future risk as well.


Sources: Washington Post, MSNBC

Obama Vows To Crackdown On Corporate Tax Cheats

"In a time of great need, when our families and our nation are finding it necessary to tighten our belts, and be more responsible with how we spend our money, we can’t afford to waste taxpayer dollars. And we especially can’t afford to let companies game the system."









N.C. Tax Negotiations Yield $427 million, End Business Disputes


N.C. Tax Collectors brought in a Christmas bonus of $427million for the state in December.

That's how much the N.C. Department of Revenue recouped through a program aimed at settling tax disputes with corporations and businesses. The agency estimated it could bring in $150 million when it started the program in August but ended up with an extra $277 million beyond what was factored into the state budget.

"It couldn't have come at a better time," Revenue Secretary Ken Lay said.

The bonus collections will more than wipe out what was a shortfall of $110million at the end of November, compared to projections.

But the good news may not linger. Barry Boardman, the legislature's chief economist, said revenues in December still appear to fall behind what was budgeted.

"I'm not seeing any big turn toward the positive," Boardman said.

The Revenue Department last summer started the corporate tax resolution program. It included waiving penalties for those who settled and 400 corporate taxpayers who were disputing their tax bills. Of those, 300 tried the program, and 236 cases were settled by Dec. 15. Some cases were new; some covered more than a decade.

"We kind of exceeded our wildest dreams," said Linda Millsaps, the department's chief operating officer.

The agency targeted businesses whose disputes involved the state franchise tax, tax reporting for multiple components of the same company and credit card companies contesting how much of their operation was in North Carolina.

Officials said they could not name the corporations involved because state law prohibits departmental disclosure of taxpayer information. Those that chose not to participate remain in the normal dispute resolution process. .

Lay described the negotiations as a business-to-business dialogue in which each side offered its view of the tax debt and the evidence to back it up. A few companies got a tax refund.

The credit card company disputes involved whether the companies maintained enough of a presence in North Carolina to pay state tax, such as offering a credit card in the name of a North Carolina company. Some cases involved the franchise tax, a tax on what a company is worth as opposed to what it makes, and what should be counted toward that value.

Other cases centered on "combined reporting," and whether a company's various appendages can pay taxes separately or whether it has to file as one corporation. Wal-Mart is among the companies that have fought North Carolina in the courts over combined reporting. Officials would not say whether Wal-Mart was among those who settled.

The department did not start out with a grand total of what it thought the companies should pay and bargained down to the $427 million, Lay said. The discussions focused on the method of tax that was in dispute instead of the dollar figure - the rules of the game, rather than the points.

An incentive for the companies was that they didn't just settle a money dispute, they reached an agreement on the guidelines for paying future taxes. The Revenue Department doesn't have to expend the resources to fight legal battles over dozens of tax bills.

"The corporations win," Lay said, "and we win."

Individual taxpayers who don't have a corporation's bullpen of lawyers may wonder why they don't get a chance to settle quarrels over their tax bills.

They do, Lay and Millsaps said. The agency operates several programs that offer individuals the opportunity to settle their tax disputes. The programs typically require that the applicants have a history of paying their taxes.

"I don't know that they're doing anything different (for businesses)," said Elaine Mejia, director of the N.C. Budget & Tax Center, which advocates on behalf of low income families.

Lay said individual taxpayers should not feel they have been "left out in the cold."


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Sources: Politico, WRAL, wraMcClatchy Newspapers, Charlotte Observer, Google Maps

Bernanke Advocates Stronger Banking Regulation & No New Bubbles!

Bernanke Says Rate Increases Must Be An Option, No New Bubbles


Federal Reserve Chairman Ben Bernanke cracked the door open a bit more to the idea of raising interest rates if a new financial bubble emerges.

He also mounted a vigorous defense against critics who say it was the Fed's low-interest-rate policies over the past decade that caused the last housing bubble. Instead, he said, the problem was lax regulation, which permitted banks to issue a slew of exotic mortgages that households later had trouble paying.

"We must be especially vigilant in ensuring that the recent experiences are not repeated," Mr. Bernanke said in a speech Sunday at the American Economic Association's annual meeting here. Better regulation is his first line of defense against future crises. But the Fed also needs to "remain open" to using the blunt tool of higher interest rates to avert or pop future asset bubbles, Mr. Bernanke said, particularly if other approaches aren't working.

The Fed's views on asset bubbles are slowly changing. Earlier this decade, when Mr. Bernanke was a Fed governor, he and other central bank officials said financial bubbles weren't something the Fed could identify or pre-empt effectively. Its focus was on keeping inflation and unemployment low. Its bubble strategy was to mop up after a bubble burst with lower interest rates to prevent damage to the broader economy.

After a speech in November, Mr. Bernanke said, "never say never," when asked whether the Fed should instead use higher interest rates to pre-emptively prick future bubbles, and he later said he wouldn't rule it out. Sunday, he accepted that there might be situations that warrant such an approach, particularly if other methods aren't working, such as better regulation.

"We still have much to learn about how best to make monetary policy and to meet threats to financial stability in this new era," he said.

The Fed has pushed overnight bank-lending rates to near zero and has said it expects to keep them there for at least several more months because the economy remains weak and inflation low. Some private economists and officials in Asia and Europe have warned this could plant the seeds for a new bubble, though Fed officials have argued that market gains in the U.S. haven't gotten out of hand.

This year's meeting of economists from universities around the world and top government officials has been dominated by debate about the causes and consequences of the financial crisis.

While many economists here believe a recovery is under way, many are wary about its strength and staying power. Donald Kohn, the Fed's vice chairman, pointed to "lingering credit constraints" and cautious businesses and households as reasons to expect a slow rebound this year. While he said the Fed would need to begin withdrawing its stimulus from the economy "well before" it has returned to full strength, he gave no indication that a tightening was approaching any time soon.

Martin Feldstein, a Harvard University economist and former Reagan administration economist, is worried that consumer spending could wane as government stimulus wears off. "There is a significant risk the economy could run out of steam sometime in 2010," he warned.

Critics have said the Fed kept interest rates too low for too long earlier this decade, helping to fuel a housing bubble at the root of the recent financial crisis.

Mr. Bernanke acknowledged that monetary policy was accommodative not only in the U.S. but all over the world during this stretch. But he made a lengthy, professorial case -- detailed with 10 pages of charts -- against the idea that the Fed's interest-rate policies were the main problem.

For example, he noted that some countries such as Germany and Japan had looser monetary policies than the U.S. during this stretch, but didn't experience housing bubbles. Other countries such as Spain and Ireland had tighter policies but even bigger booms.

Mr. Bernanke pinned the blame on lax supervision of toxic mortgages by the Fed and other bank regulators, as well as excessive money going into U.S. assets from Asian investors. "Borrowers chose, and were extended, mortgages that they could not be expected to service in the longer term," he said.





Anthony Foxx Says He'll Be "Laser-Focused" On Bringing In Jobs Via Loans To Former Bank Employees


After Anthony Foxx is sworn in as Charlotte's new mayor Monday night, the Democrat said he will tackle the city's biggest problem: high unemployment.

Foxx said he plans to ask city staff and his colleagues on City Council to tweak a city loan program for small businesses. The program currently steers money toward fledgling businesses planning to open in economically distressed corridors of the city, such as North Tryon Street.

Foxx wants to prioritize the loans for what he calls critical businesses, such as banking. If a team of laid-off bankers have an idea for a start-up, Foxx wants them to have access to no-interest loans even if their office is in SouthPark.

"The current program is corridor-based," Foxx said. "I want it to be industry-based."

Foxx said the state has a program to retrain unemployed financial service workers, but he said there isn't a loan program to help them.

Foxx will become the city's first new mayor in 14 years and the city's first Democratic mayor in 22 years.

When Republican Pat McCrory became mayor in 1995, Mecklenburg's unemployment rate was 3.2 percent. The city was in the midst of a long run of prosperity, much of it fueled by the expansion of its two hometown banks. In his first address as mayor, McCrory said crime was his top priority.

The situation is different today.

The Charlotte area's unemployment rate in October was 12 percent, up from 11.8 percent in September. It's higher than the state average of 11 percent.

"The economy is the single most important issue for all of us," Foxx said Thursday.

Foxx said he hopes to have the small-business loan program tweaked this month.

The current program, known as the business equity loan program, has been around since the late 1980s.

A small business may have a $100,000 loan from a bank, but still need more money. The city can offer the business a low-interest loan that's no more than 25 percent of the total amount borrowed.

The requirement today is that the business locate in a city-designated economically distressed corridor.

The challenge of improving the local economy will be difficult for a mayor and City Council whose jobs are usually focused on meat-and-potatoes issues such as paving roads, hiring police officers and building affordable housing.

"It's mostly a cheerleading role," said UNC Charlotte political science professor Ted Arrington. "That's partially because the Charlotte mayor is a weak mayor, but also because there isn't a lot that the city can do."

Foxx said he also wants to assemble a team of business leaders to brainstorm ways to strengthen the economy.

One part of that would be how to better market some of the region's lesser-known industries, such as energy and biotechnology. McCrory started to do this in the last 18 months, touting the city's expanding energy-related economy in interviews.

Foxx said Friday he wouldn't discuss whether he would work with N.C. Gov. Bev Perdue to offer Bank of America incentives to stay in Charlotte.

"I will be laser-focused on keeping jobs in Charlotte," Foxx said.

Foxx said he also will appoint a group of civilians to review the city budget and look for savings.

Foxx will take office with something no Charlotte mayor has had: one party holding eight of 11 council seats.

The new council will have an 8-3 Democratic majority - the biggest advantage by either party since the council became partisan in 1977. The current council has a 7-4 advantage for Democrats.

Democrats David Howard and Patrick Cannon are replacing at-large council members Foxx and Republican John Lassiter, whom Foxx defeated for mayor.

McCrory said he's concerned about having one party in control of the City Council, County Commission and now the mayor's office.

"The big challenge is you have one dominant party - who will be the check on spending?" McCrory said. "The mayor's office was the only political balance."



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Sources: Wall Street Journal, McClatchy Newspapers, Charlotte Observer, Google Maps

Jesse Jackson & Tim Geithner Meet To Talk Jobs

Geithner meets with Jesse Jackson



US Treasury Secretary Timothy Geithner was set to meet Wednesday afternoon with the Rev. Jesse Jackson to discuss the economy and job creation. Their meeting is closed to the press.

Jackson's not the only source of liberal pressure that Geithner's encountering Wednesday. The Treasury chief also sits down in the evening with the Congressional Progressive Caucus for a conversation about financial regulatory reform.



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Sources: Politico, Google Maps

Pres. Obama Praises Passge Of Diluted, Partisan Financial Reform Bill

The President explains that while he continues to focus on jobs, it is also profoundly important to address the problems that created this economic mess in the first place. He commends the House of Representatives for passing reforms to our financial system, including a new Consumer Financial Protection Agency, and blasts Republican Leaders and financial industry lobbyists for their joint pep rally to defeat it.





Home prices up, more borrowers Underwater. CNBC's Diana Olick reports that while home prices show a slight gain, about 25 percent of homeowners owe more on their mortgages than they are worth.

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House kills Bankruptcy Mortgage Relief in Wall Street bill


The House has rejected an effort to expand a Wall Street regulation bill with mortgage relief that would let debt-ridden homeowners reduce their payments in bankruptcy court. The vote was 241-188 to reject.

The provision would have revived a previous bill that passed the House but later failed in the Senate.

Democrats hoped that by inserting the provision in the regulatory legislation they would have had another opportunity to make it law. Aiding homeowners through bankruptcy had been a key feature of President Barack Obama's foreclosure fighting proposal, but the president did not push for it.

Banks and credit unions have lobbied against the bankruptcy measure. They say it would force a flood of bankruptcy filings and ultimately drive up mortgage rates.





US House Passes Broad Wall Street Regulatory Overhaul


The House passed the most ambitious restructuring of federal financial regulations since the New Deal on Friday, aiming to head off any replay of last year's Wall Street failures that plunged the nation deep into recession.

The sprawling legislation would give the government new powers to break up companies that threaten the economy, create a new agency to oversee consumer banking transactions and shine a light into shadow financial markets that have escaped the oversight of regulators.

The vote was a party-line 223-202. No Republicans voted for the bill; 27 Democrats voted against it.

While a victory for the administration, the legislation dilutes some of President Barack Obama's recommendations, carving out exceptions to some of its toughest provision. The burden now shifts to the Senate, which is not expected to act on its version of a regulatory overhaul until early next year.

The president praised the House action Friday, and called on Congress to act swiftly to get the bill to the White House for his signature.

"The crisis from which we are still recovering was born not only of failure on Wall Street, but also in Washington," Obama said. "We have a responsibility to learn from it and to put in place reforms that will promote sound investment, encourage real competition and innovation and prevent such a crisis from ever happening again."

The legislation would govern the simplest payday loan and the most complicated high-finance trades. In its breadth, the measure seeks to impose restrictions on every house of finance, from two-teller neighborhood thrifts to huge interconnected conglomerates.

Democratic leaders had to fend off a last-minute attempt to kill a proposed consumer agency, a central element of the legislation and one the features pushed by the White House. The agency would take over consumer protection powers from current banking regulators, and big banks and the U.S. Chamber of Commerce vigorously opposed the idea.

Democrats said the broad legislation would help address problems that led to last year's calamitous financial crisis. Republicans argued that it overreached and would institutionalize bailouts for the financial industry.

"Let's put it to the American people: Do you prefer the Republican position of doing literally nothing to rein in these abuses or should we try to rein them in?" Rep. Barney Frank, who led the Democratic effort on the bill, asked moments before the final vote.

Republicans cast the regulatory bill as a burden to business and argued that it would continue to protect companies considered too big to fail. They offered an alternative that called for special bankruptcy proceedings to dismantle failing financial institutions. That alternative failed.

"This house has been on a spending spree, a bailout spree and a regulatory spree that I could never have imagined in any of my prior 18 years here in Congress," Republican Leader John Boehner of Ohio said.

Consumer advocates cheered the survival of the consumer protection agency but said the overall legislation fell short, especially in the regulation of complex investment instruments known as derivatives.

The legislation aims to prevent manipulation and bring transparency to the $600 trillion global derivatives market. But an amendment by New York Democrat Scott Murphy, adopted 304-124 Thursday night, created an exception for nonfinancial companies that use derivatives as a hedge against price, currency and interest rate changes rather than as a speculative investment.

The amendment also provided an exception for businesses that are considered too small to be a risk to the financial system.

A Democratic effort to make more companies subject to derivatives regulations and to abusive-trading rules failed.

When the Obama administration first proposed a package of regulations, it called for regulations of derivatives without any exceptions. But a potent lobbying coalition that included Boeing Co., Caterpillar Inc., General Electric Co., Coca-Cola and other big companies persuaded lawmakers to dilute the restrictions.

"It does fall well short of what the administration promised and what everybody assumed we would get," said Barbara Roper, director of investor protection for the Consumer Federation of America. "It's a weakness in the bill and a win for Wall Street. Hedge funds and others that are not bona fide hedgers of commercial risk will slip through this language."

The bill would create a Financial Services Oversight Council made up of the Treasury secretary, the Federal Reserve chairman and heads of regulatory agencies to monitor the financial markets for potential threats to nation's system.

It would identify firms and activities that should be subject to heightened standards, including requirements that they place more money in reserve. Companies would have to plan for their own demise, detailing how they would be dismantled if they failed. The government could dismantle even healthy firms if they were considered a grave risk to the economy. Large firms with assets of more than $50 billion, and hedge funds with at least $10 billion in assets, would pay into a $150 billion resolution fund that would cover the costs of dismantling such a company.

It was that fund that Republicans argued amounted to yet another bailout pool.

The Federal Reserve, criticized for not spotting last year's crisis, would lose power in the legislation. The measure would limit the Fed's unilateral ability to inject large amounts of money into financial institutions. It also would take away the Federal Reserve's consumer regulation authority and would subject it to a broad audit by Congress' investigative arm.

The legislation also takes on Wall Street compensation. Company shareholders would get a nonbinding vote on the pay of top executives. Federal banking regulators would have to approve compensation practices, though not actual pay, at banks and bank holding companies.





Dems paint Wall St. vote as big win


Not a single Republican cast a “yes” vote for the Wall Street reform bill in the House Friday.

Democrats could hardly contain their glee.

“Seriously?” was the subject line of an asked the headline of an e-mail from Democratic National Committee communications director Brad Woodhouse after the House vote.

“Representative Mary Bono Mack has apparently learned nothing from the near-collapse of big banks and financial institutions that put our entire economy at risk,” read the e-mail sent to Mack’s California district and more than three dozen other target GOP incumbents by the Democratic Campaign Committee, slamming the incumbents for backing Wall Street over consumers.

With polls showing voters furious at Wall Street and their big fat bonus checks, Democrats smell an opportunity to turn their political fortunes around with the help of the financial reform legislation that’s moving through Congress.

The DCCC is raising money to produce “hard-hitting” spots against Republicans who sided with financial lobbyists “trying to kill reform,” according to a Nov. 10 fundraising e-mail. And the rhetoric during and after the debate this week made clear, Democrats – at least in the House – will try to turn their Republican opponents into Wall Street’s lapdogs and saddle them with the populist outrage still burning in the heartland.

The pitch may not be as easy as it sounds. Sure, opposing legislation that cracks down on greedy bankers, enhances consumer protection and puts an end to taxpayer bailouts sounds like political suicide. But Republican strategists disagree that this was a bad vote for their party.

“Opposing Barney Frank is not going to be a political liability” in swing districts, said GOP pollster Adam Geller, who worked for Christopher Christie’s successful 2009 New Jersey gubernatorial campaign. Voters see Frank – and House Speaker Nancy Pelosi, the other major face of the bill – “as kind of on the left extreme,” he said.

And a closer look at Friday’s votes shows the issue isn’t that black and white in every Democratic district.

Quite a few Democrats in tough reelection races bolted off the party line to oppose the bill, undermining the notion that Democrats have the undisputed political high ground on this one. The 27 Democrats who opposed the bill included highly vulnerable members such as Reps. Bobby Bright (D-Ala.), Eric Massa (D-N.Y.), Zach Space (D-Ohio) and Tom Perriello (D-Va.) – who took flak at home for voting “yes” on Democrats’ climate change bill. There were also a number of less-imperiled but still-worried Democrats that voted no.

And Democratic party brass also tacitly acknowledged that the politics on this aren’t so clear cut when they agreed to give Idaho freshman Walt Minnick a floor vote on his controversial amendment to gut the new consumer protection agency at the heart of the legislation. While the bulk of their rank-and-file opposed the measure, leadership wanted to give moderate Democrats the vote to help insulate themselves against industry-financed attacks next fall, leadership aides said, giving these lawmakers a chance to vote with the Chamber of Commerce – a strong opponent of the newly created consumer-protection agency that highlighted the vote politically.

After some tough whipping, Democratic leaders were able to defeat the amendment, 223-208, with 33 Democrats supporting it. But they were scared for a few hours that they might not be able to, said leadership aides.

Those votes suggests that voters in some of these tough Democratic districts the Republican arguments that the legislation amounts to a perpetual bailout, harmful government control of the economy and job-killing layers of bureaucracy might be more likely to resonate.

“As in the case of health care and energy policy, this bill was about empowering the government and not the individual. Government control and command was not what made America the largest and most successful economy in the world,” said Rep. Spencer Bachus (R-Ala.). “The array of new regulations and taxes on consumers, investors and businesses will destroy jobs and further undermine the fragile economy.”

Nonetheless, Democrats’ own polling gives them reasons for optimism. A recent survey done by Democratic polling firm Anzalone Liszt for Americans United for Change found that 70 percent of voters – Democrats, Republicans and independents alike – want to see major reform of the financial system.

Most Americans aren’t aware of the reform measures put forward by the Obama White House, but when voters heard descriptions of the proposals to beef up oversight of big banks, create a new consumer protection watchdog and crack down on corporate abuses, support shot up from 35 percent to 60 percent, the poll found. Independents were particularly supportive of the plan after hearing the description.

“This creates an opportunity for the President and members of Congress to address major financial concerns of voters and to be seen as standing up for working families,” said a memo from pollsters John Anzalone and Matt Hogan.

In an interview, Anzalone said the financial reform bill could be “the populist issue of the cycle, bringing strong accountability and oversight to Wall Street. There’s no good way to spin this one, except voting for it because it’s a good bill and people think it’s a good bill.”

Republicans who oppose the bill “are going to pay a very heavy price,” DCCC Chairman Chris Van Hollen (D-Md.) warned Thursday on a conference call with reporters. He referred to a much-publicized meeting of banking lobbyists convened by House Minority Leader John Boehner earlier in the week to rally against the bill, saying “it was very clear whose side the Republicans were on, and they were on the side of protecting the special interests and allowing us to once again get ourselves in a mess where the taxpayers are left holding the bag for bad decisions on Wall Street.”

“This Republican recession based on [their] Wild West mentality cost this country millions of jobs and these guys should be ashamed of themselves,” fumed Rep. Ed Perlmutter (D-Colo.), taking a page from the Anzalone polling memo, which urged lawmakers to stress how financial reform will prevent future job losses.

“There is some risk” to voting against legislation framed as a reform of Wall Street, acknowledged Rep. Mike Castle of Delaware, a moderate Republican who is running for Joe Biden’s Senate seat. “Democrats have presented it as such – and I’m not sure it’s a fair presentation. I think it’s up to Republicans to be able to rebut it, maybe better than we have so far.”

Most Republicans dismiss the idea that their vote against the financial package would come back to haunt them.

“Anyone who expects a political advantage by supporting this bill is ignoring the public opposition to the Democrats’ agenda of big government and fewer jobs,” said National Republican Congressional Campaign spokesman Paul Lindsay.

“There’s a political opening on any bill, whether you vote yes or no, somebody can always spin it in a way that’s not advantageous to you,” said Rep. Scott Garrett (R-N.J.).

“Good policy at the end of the day makes good politics. And someone can just as easily argue that this is disastrous policy that would give us too big to fail banks, turning banks into utility companies that hurt the little guy,” said Rep. Paul Ryan (R-Wisc.).

“They’ll use it for ads, absolutely. Of course. You can twist your mind into pretzels on every one of these votes because they can twist, distort and demagogue just about any vote around here. If you let that guide you, then you’re running around in circles around here.”




Federal Judge: ACORN Funding Restored


A Federal Judge in New York ordered that ACORN’s federal funding be restored, rolling back a slew of Congressional actions that sought to stop taxpayer money from flowing to the community group on the heels of a fall full of embarrassments for it.

Nina Gershon, a district judge in New York, issued a preliminary injunction directing the US Department of Housing & Urban Development, the Office of Management & Budget, and the Treasury department to disregard a bill signed into law by President Obama that prohibited federal funding of the Association of Community Organizations for Reform Now.

“The question here is only whether the Constitution allows Congress to declare that a single, named organization is barred from all federal funding in the absence of a trial,” Gershon wrote in her opinion. “Because it does not, and because the plaintiffs have shown the likelihood of irreparable harm in the absence of an injunction, I grant the plaintiffs’ motion for a preliminary injunction.”

Gershon said that “none of the government’s justifications stand up to scrutiny” and that “no non-punitive rational” is obvious.

ACORN was the subject of bi-partisan disdain in September, after undercover videos were released that seemed to show the organization’s employees offering advice on how to break the law. Republicans and Democrats voted to stop federal funding of the group – a measure signed into law by the president on the back of an appropriations bill.

In November, the group sued the federal government, claiming that the provision, attached to the legislative branch appropriations bill, was a bill of attainder – unconstitutional legislation that unfairly punishes one group. As part of this lawsuit, ACORN sought a Restoration of Federal Funding.

With Friday’s injunction, ACORN stands to begin receiving funds once again, including between $40,000 and $60,000 for housing assistance, according to the decision from the district court in eastern New York.

“Today’s ruling is a victory for the Constitutional Rights for all Americans and for the citizens who work through ACORN to improve their communities and promote responsible lending and homeownership,” ACORN CEO Bertha Lewis said in an emailed statement.

It is also is the second in a string of victories for ACORN. An investigation by former Massachusetts Attorney General Scott Harshbarger largely absolved the organization from any wrongdoings or illegalities in a hidden-video scandal which allegedly showed the organization’s employees offering advice on how to dodge taxes while setting up a prostitution ring of underage illegal immigrants.

Republicans are already hammering away at the decision. Rep. Darrell Issa (R-Calif.), a longtime critic of ACORN and author of a report on the group’s problems, framed Gershon as an “activist judge” appointed by former President Bill Clinton.

“This left-wing activist Judge is setting a dangerous precedent that left-wing political organizations plagued by criminal accusations have a constitutional entitlement to taxpayer dollars,” Issa said in a news release. “The Obama administration should immediately move to appeal this injunction.”


Sources: Whitehouse.gov, Politico, Fox News, My Fox33.com, CNBC, ACORN, Youtube

House Rejects Expanded Mortgage Help In Wall Street Reform Bill

House kills Bankruptcy Mortgage relief in Wall Street bill


The House has rejected an effort to expand a Wall Street regulation bill with mortgage relief that would let debt-ridden homeowners reduce their payments in bankruptcy court. The vote was 241-188 to reject.

The provision would have revived a previous bill that passed the House but later failed in the Senate.

Democrats hoped that by inserting the provision in the regulatory legislation they would have had another opportunity to make it law. Aiding homeowners through bankruptcy had been a key feature of President Barack Obama's foreclosure fighting proposal, but the president did not push for it.

Banks and credit unions have lobbied against the bankruptcy measure. They say it would force a flood of bankruptcy filings and ultimately drive up mortgage rates.




House approves Financial Reform bill



A little over a year after Congress bailed out the financial system, the House on Friday passed a sweeping overhaul of the nation’s financial architecture and the rules that govern it, seeking to prevent a repeat of last year’s meltdown.

Friday’s 223-to-202 vote was a major victory for the Obama administration, which has made Wall Street reform a policy and political imperative, second only to health care on its agenda. But like so much of the White House’s other legislative agenda, this too, was a partisan win, as not a single Republican voted for the bill.

House Minority Whip Eric Cantor (R-Va.) aggressively made the case for Republicans to oppose the bill, and in the end all of them did. In addition, 27 Democrats voted no. ]

The massive plan touches nearly every corner of the financial universe, from the now-opaque and largely unregulated derivatives market to consumer products like credit cards to credit rating agencies to executive compensation. It also creates a new consumer financial watchdog agency.

“The crisis from which we are still recovering was born not only of failure on Wall Street, but also in Washington,” President Barack Obama said in a statement. “We have a responsibility to learn from it, and to put in place reforms that will promote sound investment, encourage real competition and innovation, and prevent such a crisis from ever happening again.”

The legislation sends a clear message to Wall Street that “the party is over. Never again will the reckless behavior [of] a few threaten the fiscal stability of our people,” said House Speaker Nancy Pelosi (D-Calif.) at a news conference after the final vote. The legislation, she continued, would “inject transparency and accountability into our financial system.”

The action now moves to the Senate, where the final outlines of the financial reform package remain murky. Senate Banking Chairman Chris Dodd (D-Conn.) introduced draft bill Nov. 10, but has since gone back to the drawing board, with key members on his committee now working in two-person bipartisan groups to tackle the thorniest issues.

Obama and congressional Democrats have put considerable emphasis on the so-called Consumer Financial Protection Agency. The provision was the object of some of the most intense lobbying of the entire package up until the very end. Hated by the financial industry and big business, the CFPA became the cause célèbre of liberals and consumer advocates.

Rep. Walt Minnick, a Blue Dog Democrat from deep-red Idaho, offered an amendment that would have stripped the new standalone watchdog out of the legislation and replace it with a council of existing regulators to deal with consumer protection laws. Democratic leadership tried to keep the amendment off the House floor. But Blue Dogs and the moderates that make up the pro-business New Democrat Coalition threatened to oppose the rule governing the bill unless that and other amendments were ruled in order.

The U.S. Chamber of Commerce, the Financial Services Roundtable and other industry groups lobbied members to support Minnick’s amendment; the Chamber – which has run a multimillion-dollar campaign against the CFPA — made it a key vote.

Democratic leadership whipped members against it, and House Majority Leader Steny Hoyer (D-Md.) took to the floor to speak against the measure, a sign of leadership’s concern that Minnick could win.

“Very frankly my friends, when you wring your hands about the cost of this referee called the consumer financial protection agency… pales into insignificance in the $1.5 trillion dollars that we have borrowed to get this country out of the deep, deep, deep hole caused by the failure to regulate properly,” Hoyer said, addressing statements from Minnick and his supporters that creating a new stand-alone agency would cost $4.6 billion – a figure Hoyer disputed.

"And it wasn’t the rich guys on Wall Street that paid that price, it was every one of our taxpayers that paid that price. So when you talk about cost, the cost of doing nothing, the cost of not having a referee on the field, skews the game so badly that the little guys, the guys who sent us here, the guys who asked us to protect them from those over which they have now power to protect, they said protect us. And that’s what this debate is about.”

In the end, Minnick’s amendment was defeated, 223 to 208, with 33 Democrats supporting it and eight Democrats not voting.

CFPA’s opponents still embraced the close vote as a sign of progress, and certainly the fate of the provision is cloudy when it comes to the more conservative Senate.

“More than 200 members supporting the Minnick amendment represents a significant victory for real consumer protection reform. It demonstrates that there is support for an alternative to new government bureaucracy, and gives us fresh momentum for an open and deliberative debate in the Senate about more effective approaches to both protect consumers and improve access to credit for our nation’s small businesses,” said Ryan McKee, senior director of the Chamber’s Center for Capital Markets Competitiveness.

House Financial Services Chairman Barney Frank (D-Mass.), who crafted much of the legislation with the Treasury and shepherded it through the House, described the package as the most significant increase of financial regulation since Franklin Roosevelt’s New Deal. He said it was needed to deal with “the catastrophe inflicted on this country by a lack of sensible financial regulation” a year ago.

“The free market – particularly when it is in an innovative phase – works best with a clearly defined set of rules. And that’s what we’ve done,” Frank said. The legislation would “give full [rein] to the creativity of the financial community and their ability to play their role but it will limit the kind of abuses we’ve had.”

Republicans tried to send the entire bill back to committee as well as kill the Troubled Asset Relief Program (TARP), which the Obama administration just announced that it is extending through October 2010.

The motion was defeated, 232 to190.

“Today, House Democrats voted to continue TARP and go right on spending taxpayer dollars with reckless abandon,” charged House Minority Leader John Boehner (R-Ohio).

To many experts, the real meat of the package is the so-called dissolution authority it would grant federal regulators to put failing massive financial institutions to death without the need of taxpayer bailouts.

Administration officials have said that the absence of such authority is what forced them to seek taxpayer money to deal with firms such as Lehman Brothers or the Federal Reserve’s emergency lending powers to rescue mega-insurer AIG.

Under the bill, the fund would collect $150 billion from the largest financial institutions to pay for the cost of winding down one of their own should another crisis strike. Critics charge that taxpayers will still be on the hook since the fund may not cover the cost of another meltdown.

“There is no bailout fund,” Frank said during debate Thursday, taking on Republican charges that the bill amounts to a perpetual bailout fund. “The bailouts of AIG and Bear Stearns, not possible, illegal under this bill. If a company fails, it will be put to death. Yes, we have death panels, but they got the death panels in the wrong bill. The death panels are in this bill. We will spend money to get rid of them in ways that will minimize damage, money that will come from the financial community.”

The legislation also created a systemic risk council of existing regulators to act as the ranger atop the fire tower, keeping its eye on the entire forest rather than the individual tress as existing prudential regulators do.

The legislation also included a controversial – but wildly popular among members of Congress – measure from libertarian favorite Ron Paul (R-Texas) to greatly expand the Government Accountability Office’s power to audit the Federal Reserve.


Sources: Politico, My Fox33.com

U.S. House Votes Yes To Wall Street Reform 223-202...Is It Too Late??

Speaker Pelosi praises finance overhaul. House Speaker Nancy Pelosi says a sweeping overhaul of financial regulations will bring a new level of transparency and accountability to Wall Street and big banks.

Visit msnbc.com for breaking news, world news, and news about the economy

U.S. House passes stricter Wall Street Regulations.

Visit msnbc.com for breaking news, world news, and news about the economy

U.S. House approves Financial Reform bill



A little over a year after Congress bailed out the financial system, the House on Friday passed a sweeping overhaul of the nation’s financial architecture and the rules that govern it, seeking to prevent a repeat of last year’s meltdown.

Friday’s 223-to-202 vote was a major victory for the Obama administration, which has made Wall Street reform a policy and political imperative, second only to health care on its agenda. But like so much of the White House’s other legislative agenda, this too, was a partisan win, as not a single Republican voted for the bill.

House Minority Whip Eric Cantor (R-Va.) aggressively made the case for Republicans to oppose the bill, and in the end all of them did. In addition, 27 Democrats voted no. ]

The massive plan touches nearly every corner of the financial universe, from the now-opaque and largely unregulated derivatives market to consumer products like credit cards to credit rating agencies to executive compensation. It also creates a new consumer financial watchdog agency.

“The crisis from which we are still recovering was born not only of failure on Wall Street, but also in Washington,” President Barack Obama said in a statement. “We have a responsibility to learn from it, and to put in place reforms that will promote sound investment, encourage real competition and innovation, and prevent such a crisis from ever happening again.”

The legislation sends a clear message to Wall Street that “the party is over. Never again will the reckless behavior [of] a few threaten the fiscal stability of our people,” said House Speaker Nancy Pelosi (D-Calif.) at a news conference after the final vote. The legislation, she continued, would “inject transparency and accountability into our financial system.”

The action now moves to the Senate, where the final outlines of the financial reform package remain murky. Senate Banking Chairman Chris Dodd (D-Conn.) introduced draft bill Nov. 10, but has since gone back to the drawing board, with key members on his committee now working in two-person bipartisan groups to tackle the thorniest issues.

Obama and congressional Democrats have put considerable emphasis on the so-called Consumer Financial Protection Agency. The provision was the object of some of the most intense lobbying of the entire package up until the very end. Hated by the financial industry and big business, the CFPA became the cause célèbre of liberals and consumer advocates.

Rep. Walt Minnick, a Blue Dog Democrat from deep-red Idaho, offered an amendment that would have stripped the new standalone watchdog out of the legislation and replace it with a council of existing regulators to deal with consumer protection laws. Democratic leadership tried to keep the amendment off the House floor. But Blue Dogs and the moderates that make up the pro-business New Democrat Coalition threatened to oppose the rule governing the bill unless that and other amendments were ruled in order.

The U.S. Chamber of Commerce, the Financial Services Roundtable and other industry groups lobbied members to support Minnick’s amendment; the Chamber – which has run a multimillion-dollar campaign against the CFPA — made it a key vote.

Democratic leadership whipped members against it, and House Majority Leader Steny Hoyer (D-Md.) took to the floor to speak against the measure, a sign of leadership’s concern that Minnick could win.

“Very frankly my friends, when you wring your hands about the cost of this referee called the consumer financial protection agency… pales into insignificance in the $1.5 trillion dollars that we have borrowed to get this country out of the deep, deep, deep hole caused by the failure to regulate properly,” Hoyer said, addressing statements from Minnick and his supporters that creating a new stand-alone agency would cost $4.6 billion – a figure Hoyer disputed.

"And it wasn’t the rich guys on Wall Street that paid that price, it was every one of our taxpayers that paid that price. So when you talk about cost, the cost of doing nothing, the cost of not having a referee on the field, skews the game so badly that the little guys, the guys who sent us here, the guys who asked us to protect them from those over which they have now power to protect, they said protect us. And that’s what this debate is about.”

In the end, Minnick’s amendment was defeated, 223 to 208, with 33 Democrats supporting it and eight Democrats not voting.

CFPA’s opponents still embraced the close vote as a sign of progress, and certainly the fate of the provision is cloudy when it comes to the more conservative Senate.

“More than 200 members supporting the Minnick amendment represents a significant victory for real consumer protection reform. It demonstrates that there is support for an alternative to new government bureaucracy, and gives us fresh momentum for an open and deliberative debate in the Senate about more effective approaches to both protect consumers and improve access to credit for our nation’s small businesses,” said Ryan McKee, senior director of the Chamber’s Center for Capital Markets Competitiveness.

House Financial Services Chairman Barney Frank (D-Mass.), who crafted much of the legislation with the Treasury and shepherded it through the House, described the package as the most significant increase of financial regulation since Franklin Roosevelt’s New Deal. He said it was needed to deal with “the catastrophe inflicted on this country by a lack of sensible financial regulation” a year ago.

“The free market – particularly when it is in an innovative phase – works best with a clearly defined set of rules. And that’s what we’ve done,” Frank said. The legislation would “give full [rein] to the creativity of the financial community and their ability to play their role but it will limit the kind of abuses we’ve had.”

Republicans tried to send the entire bill back to committee as well as kill the Troubled Asset Relief Program (TARP), which the Obama administration just announced that it is extending through October 2010.

The motion was defeated, 232 to190.

“Today, House Democrats voted to continue TARP and go right on spending taxpayer dollars with reckless abandon,” charged House Minority Leader John Boehner (R-Ohio).

To many experts, the real meat of the package is the so-called dissolution authority it would grant federal regulators to put failing massive financial institutions to death without the need of taxpayer bailouts.

Administration officials have said that the absence of such authority is what forced them to seek taxpayer money to deal with firms such as Lehman Brothers or the Federal Reserve’s emergency lending powers to rescue mega-insurer AIG.

Under the bill, the fund would collect $150 billion from the largest financial institutions to pay for the cost of winding down one of their own should another crisis strike. Critics charge that taxpayers will still be on the hook since the fund may not cover the cost of another meltdown.

“There is no bailout fund,” Frank said during debate Thursday, taking on Republican charges that the bill amounts to a perpetual bailout fund. “The bailouts of AIG and Bear Stearns, not possible, illegal under this bill. If a company fails, it will be put to death. Yes, we have death panels, but they got the death panels in the wrong bill. The death panels are in this bill. We will spend money to get rid of them in ways that will minimize damage, money that will come from the financial community.”

The legislation also created a systemic risk council of existing regulators to act as the ranger atop the fire tower, keeping its eye on the entire forest rather than the individual tress as existing prudential regulators do.

The legislation also included a controversial – but wildly popular among members of Congress – measure from libertarian favorite Ron Paul (R-Texas) to greatly expand the Government Accountability Office’s power to audit the Federal Reserve.


Sources: Politico, MSNBC, Wikipedia

Mel Watt Criticizes Obama Admin. (Gimmick)...Since When Does Mel Care About Poor Black Voters??

African-Americans and Jobs. While the recession has taken jobs from all races, the jobless rate among blacks exceed that of others. African-Americans from Oakland and Berkeley, Calif., talk about the issue.

Visit msnbc.com for breaking news, world news, and news about the economy

Mel Watt in group criticizing Pres. Obama


U.S. Rep. Mel Watt, a Charlotte Democrat, is among the ten members of the Congressional Black Caucus criticizing the Obama administration for not doing more for African-Americans in the recession.

The group withheld their votes on a financial services bill earlier this week and later said they were pressuring the White House to do more, The Hill reports. Unemployment for blacks is approaching 16 percent, compared to the national rate of 10.2 percent.

The caucus members spelled out several policy steps they want the administration to take, such as foreclosure reduction efforts and more aid to community banks that lend to African-Americans.







R.I.P. Mel Watt: We Come To Bury Him Not Praise Him


Posted Tue, 10/31/2006 - 18:00 by Leutisha Stills

by Leutisha Stills

Rep. Mel Watt of North Carolina is stepping down after 2 years as chair of the Congressional Black Caucus. CBC Watch correspondent Leutisha Stills evaluates his tenure, and pronounces Watt dead on arrival.

In looking back at how the Congressional Black Caucus has operated in the last two years, we at CBC Monitor, have not come to praise Congressman Mel Watt's (D-NC), leadership, but to bury him in his performance as Chairman of the Congressional Black Caucus for the past two years.

You can't really praise an individual's leadership when they consistently subverted it to do the will of House Minority Leader, Representative Nancy Pelosi (D-CA), in the hopes of receiving favorable treatment from her. Watt's obsequious relationship with Pelosi negatively impacted everything the CBC attempted to do as a Caucus, and rendered them virtually ineffective.

The fact that the CBC is as ineffective as Mel Gibson's apology for his anti-Semitic remarks, was not lost on individuals attending this year's CBC Legislative Weekend. It was reported to CBC Monitor by reliable sources on Capitol Hill that attendance at this year's conference was down by an estimated 15,000 people. Well, people get tired of attending events, using their own money, vacation time and travel, to listen to elected officials talk loud and say nothing, as well as do talk loud and do nothing.

"Watt's obsequious relationship with Pelosi negatively impacted everything the CBC attempted to do as a Caucus."

Mel Watt deserves all the ridicule, scorn and derision we can hurl upon him, for his decided lack of leadership and a woeful unwillingness to call out any renegade CBC member for voting the corporate interests that serve to decimate the majority Black districts they represent, in the name of maintaining unanimity. Even when his own colleagues made the customary laudable speeches, praising his leadership, one got the sense that they really didn't mean what they said.

His repeated capitulation to House Minority Leader Pelosi, one assumes, is in the hope that he positions himself well for a plum committee assignment, should the Democrats take back Congress in November, by holding himself out to Pelosi as being a "good, non-threatening Negro," while selling out his own Caucus, even though he always voted in such a way that earned him a position on the Honor Roll since we began publishing the Report Card.

Well, for his trouble to attempt to maintain unanimity, as well as subverting the CBC's own political agenda (if they ever had one) to stay in Pelosi's good graces, those who relied on the CBC being the "Conscience of the Congress" got the following results of Black Leadership for their reliance:

* 20 CBC members were scrubbed off the list of lawmakers who sponsored legislation to renew provisions of the Voting Rights Act, because Pelosi, in code words, deemed the bill "too Black," and was afraid she wouldn't be able to get the reich-wing bigots in the GOP to sign off on it.

* The isolation of, and slinging under the bus of one of their own members (Rep. Cynthia McKinney, D-GA), for crying out about corruption in the Bush Administration, as well as being subjecting to racial profiling by the Capitol Hill Police, while circling the wagons to protect a member of the CBC who was so corrupt in the selling of his office that he has the moniker of "Dollar Bill," and is currently under a Federal indictment for bribery (Rep. William Jefferson, D-LA).

* We believe the CBC's willingness to follow Pelosi's orders and isolate McKinney may have played a direct role in her primary loss this past August. We know that their circling the wagons around Jefferson has cost the Caucus in terms of credibility among many progressive organizations, especially when, instead of taking action to handle the Jefferson matter themselves, they waited until Pelosi took the action of removing Jefferson from his committee assignments and then they cried "Foul" and implied that Pelosi's actions were racially motivated.

They probably were, but the CBC leadership did not have to abdicate personal responsibility in calling out one of their own for ethics violations and corruption of their office. We would expect the CBC to be as vigilant about their own members as they are about the system of Checks and Balances in the Federal Government.

"Watt provided derelict Black members cover in their duty as lawmakers."

* The failure to publicly censure CBC members who voted for anti-people legislation (such as the Bankruptcy bill; Net Neutrality, Estate Tax Repeal, Border Protection Act, Authorization of Iraq War, etc), when the sense of the majority of the Caucus (better than 60%) was against such legislation and voted accordingly. In excusing the votes of the renegade members, Watt provided them cover to be derelict in their duty as lawmakers, while publicly chastising organizations such as CBC Monitor, for daring to publish Report Cards highlighting such dereliction.

There are many examples of Mel Watt's dereliction as a leader of the CBC, which we have expanded on in several issues of the Black Commentator, so there is no need to do anymore than write Mr. Watt's obituary on his tenure as CBC Chairman. His obituary, from our standpoint, is brief:

He often voted correctly, but when it came to matters of importance, and holding the Caucus together as a Caucus, in leadership, HE WAS MISSING IN ACTION.

Rather than advance the Agenda of the Caucus he often sought to subvert it, at the directive of the House Minority Leader.

In so doing, and refusing to have the Caucus take positions on things that mattered, the Caucus was absent from any political position of importance.

Mel Watt threw away any bargaining chips the Caucus would have had, and rendered 41 House Members and 1 Senator as no more than bumbling fools on Capitol Hill.

In evaluating the leadership of Congressman Mel Watt as CBC Chair, we cannot praise him, we can only bury him.

Leutisha Stills, a member of the CBC Monitor, is on the Faculty Administration of George Mason University, in Fairfax, Virginia. She can be reached at leutishastills1@hotmail.com.




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Sources: Black Agenda Report, McClatchy Newspapers, Under The Dome, College Dems, Wikipedia, Google Maps