Cornel West Blasts Obama For Ignoring Middle Class, Low Income Voters

"You can't lead the people, if you don't love the people."

"You can't save the people if you won't serve the people." Dr. Cornel West


Right On Brother!

Check out Dr. Cornel West's reprimand to the Obama Administration for failing to appreciate, recognize and help America's Middle Class, Low Income voters.

Cornel West's note to Obama - January 20, 2010
by Ladypolitik

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Sources: Cornel West.com, The Grio, Daily Motion, Washington Note, Google Maps

Obama's Economic Advisers Sending Mixed Messages...No Jobs!

Economic Advisers' mixed messages


Two of President Obama’s top economic advisers disagreed Sunday about whether the recession had ended.

Lawrence Summers, director of the National Economic Council, flatly said that it had.

"Today, everybody agrees that the recession is over, and the question is what the pace of the expansion is going to be," Summers said on ABC's "This Week."

But Christina Romer, who heads the White House Council of Economic Advisers, offered a more cautious view on NBC’s “Meet the Press.”

Asked by moderator David Gregory if the recession were over, Romer replied: "Of course not. For the people on Main Street and throughout this country, they are still suffering, the unemployment rate is still 10 percent."

The divergent message from two senior Obama officials reflects the twin tasks the administration faces. As voiced by Summers, it wants to project optimism and send the message to nervous Democrats up for re-election next year and voters alike that the economy is already recovering.

“We were losing 700,000 jobs a month when President Obama took office,” Summers noted on CNN’s “State of the Union.” “Last month, we lost 11,000. So we are getting there. And most professional forecasters expect job growth by spring, and I think that's a reasonable judgment in an uncertain world.”

But as much as they want to instill hope that jobs will start returning next year, Obama and his aides also want to make it clear that they understand the difficulties Americans are facing right now and are not minimizing the challenge in a way to make them appear insensitive.

So when Romer was asked when the recession would be over, she was hesitant to offer a timeline and instead said: "I'm not going to say the recession is over until the unemployment rate is down to normal levels,” which she described as around 5%.

Further, in an effort to prepare the country for potentially worse economic news, Romer also said that the current 10% unemployment rate could rise.

"I would anticipate some bumps in the road as we go ahead," she said.

Yet just as there is a political rationale for the sort of optimism Summers offered, there is also a strategic reason behind Romer’s caution, as demonstrated by the comments of Senate Minority Leader Mitch McConnell (R-KY) on Sunday.

Asked on CBS’s “Face the Nation” about Summers’ more upbeat view of the economy, McConnell shot back that “the 11 percent who are unemployed in Kentucky don't think [the recession is] over.

The two Obama economic advisers were, however, more in sync in discussing the new regulations Congress is moving to place on Wall Street institutions, some of which were bailed out by the federal government over the past year.

“For $300 million to be spent on lobbyists trying to gut serious efforts at financial reform is not how this country should be operating,” Summers said on CNN. “For firms that have benefited from taxpayer support to be complaining about the government burdening them is, frankly, a bit rich.”

Previewing the message the president will deliver when he meets with bank CEOs in the White House Monday, Summers said on ABC: “They need to recognize that they've got obligations to the country after all that's been done for them, and there is a lot more they can do, and President Obama is going to be talking with them about what they can do to support enhanced lending to customers across the country. We were there for them. And the banks need to do everything they can to be sure they're there for customers across this country.”

In his own Sunday television appearance, the president channeled the frustrations of those in the country who are angry at Wall Street for taking taxpayer dollars and still offering million-dollar bonuses.

Asked on CBS’s “60 Minutes” if some of the banks that received bailout money paid back the federal loan so as to avoid the pay caps imposed on those companies taking TARP funds, Obama acknowledged that was likely.

“Which I think tells me that the people on Wall Street still don’t get it,” he said.


Sources: Politico, Meet the Press, ABC News

Pres. Obama's "Team Of Rivals" Fit For The Task Or Political Gimmicks?

GOP to Geithner: Step down. Congressional Republicans issued a blistering review of the Obama administration's economic policies Thursday and suggested Treasury Secretary Tim Geithner should lose his job. NBC's Kelly O'Donnell reports.

Visit msnbc.com for Breaking News, World News, and News about the Economy

Why the Greg Craig debacle matters


President Barack Obama is returning from his trek to Asia Thursday to a capital that is a considerably more dangerous place for him than when he departed.

While he was abroad, there was a palpable sense at home of something gone wrong. A critical mass of influential people who once held big hopes for his presidency began to wonder whether they had misjudged the man. Most significant, these doubters now find themselves with a new reluctance to defend Obama at a phase of his presidency when he needs defenders more urgently than ever.

This is the price Obama has paid with his complicity and most likely his active participation, in the shabbiest episode of his presidency: The firing by leaks of White House counsel Gregory Craig, a well-respected Washington veteran and influential early supporter of Obama.

The people who are most aghast by the handling of the Craig departure can’t be dismissed by the White House as Republican partisans, or still-embittered Hillary Clinton supporters. They are not naïve activists who don’t understand that the exercise of power can be a rough business and that trade-offs and personal disappointments are inevitable. Instead, they are people, either in politics or close observers, who once held an unromantically high opinion of Obama. They were important to his rise, and are likely more important to the success or failure of his presidency than Obama or his distressingly insular and small-minded West Wing team appreciate.

The Craig embarrassment gives these people a new reason – not the first or only reason – to conclude that he wasn’t the person of integrity and even classiness they had thought, and, more fundamentally, that his ability to move people and actually lead a fractured and troubled country (the reason many preferred him over Hillary Clinton) is not what had been promised in the campaign.

This may seem like a lot to hang on a Washington personnel move. After all, intramural back-stabbing or making people fall guys when things go wrong (think Bill Clinton’s Defense Secretary Les Aspin after the disaster in Somalia) are not new to Washingtonians.

But Craig’s ouster did not occur in a vacuum. It served as a focal point to concerns that have been building for months that Obama wasn’t pressing for all that might be possible within the existing political constraints (all that one could ask of a president); that his presidential voice hadn’t fulfilled the hopes raised by his campaign voice (which had also taken him a while to find); that he hadn’t created a movement, as he had raised expectations that he would; that would be there to back him up and help him fulfill his promises.

That is why it is worth pondering how the Craig story, unfolded in detail – its consequences likely will echo far longer than anything Obama said or did in Asia.

Briefly, here’s what happened, some of it told for the first time: Craig, who had known the Clintons since they were all at Yale Law School together, had served as a senior adviser to Secretary of State Madeleine Albright, but in 1998 gave up that job to help defend Bill Clinton against impeachment. Yet in 2008, he supported Obama for the nomination – not so much a turning against Hillary Clinton as being impressed early, as were some other prominent Washingtonians, by the then-state senator but would-be U.S. Senate candidate at a fundraiser held by Vernon Jordan, seeing Obama as the first potentially inspiring Democratic figure since Robert Kennedy. In the course of the campaign, Craig wrote a highly publicized memo questioning some of Hillary Clinton’s claims of foreign policy experience, such as coming under enemy fire in Tuzla, Bosnia. During the campaign, Craig coached Obama for the debates (playing McCain), and praised him highly. Craig’s imprimatur helped the neophyte Obama in certain influential circles.

He hoped to get a high foreign policy position in an Obama administration, but when Clinton was named secretary of state, this of course became untenable. The Clintons are an unforgiving lot. So, Obama and Craig agreed that Craig would take the job of White House counsel for a year, and then they’d discuss what he’d do next. Thus, Craig was handed a very tricky portfolio.

During the transition, about mid-December, Craig presented to a group of the president’s newly named national security advisers meeting in Washington – including Clinton, Defense Secretary Robert Gates, national security adviser General James Jones, and others – three proposed executive orders: One ordered the shutting down of Guantanamo in a year. (The others banned torture and closed down the C.I.A.’s “black sites”; and addressed future detainee policy.) The one-year target for closing Guantanamo resulted from consultations with human rights and detainee rights groups, who argued that Guantanamo could be shut down in three months, and with Pentagon officials, who had no united position but argued that it would take from a year to 18 months.

At the meeting, only the newly named Homeland Security Secretary Janet Napolitano, beamed in from Arizona, questioned whether a year was realistic. When Gates, as he later confirmed publicly, said that though it was an “ambitious” deadline, he supported it because setting it was the only way to get things, especially the bureaucracy, moving toward that end, and that it could be extended if it couldn’t be met, that was it.

Obama’s new national security team signed off on the executive order to close Guantanamo in a year. This was passed along to the president as well as his top aides; Craig was never in a meeting with the political side of the White House on the Guantanamo matter – and the president-elect and then president raised no objection before, when, or after he signed off on it.

Unsurprisingly, the deadline became hard to meet, for various legal and political reasons – including the congressional outburst of NIMBYISM (similar to its earlier outbursts on Dubai Ports and even Terri Schiavo – short-term, irrational, and politically motivated fits that erupt from the Congress from time to time). If Craig failed to foresee this (as some later charged), he had a lot of company.

The closing of Guantanamo is undoubtedly far further along than it would have been without the executive order. But along the way, Craig fell out of favor with the president’s political aides and, apparently, the president himself. Whether he was simply being made the fall guy, or the tight circle of Chicagoans in the White House didn’t care for this outsider, or he committed some unknown errors, suddenly, in August, leaks began to surface that his job was in danger. Non-denial denials were issued from the White House. The leaks became a pattern, a systematic, anonymous, tipping off of reporters that Craig would soon be gone.

Craig was accused, anonymously of course, of a welter of charges: of being “too close to the human rights groups” (if so, what was wrong with that?), of not playing well with others, of being a bad manager, of being fixated on Guantanamo to the detriment of other issues. In the summer, Obama offered Craig another job, which Craig declined, and the two agreed that they would discuss the matter further later in the year. But the leaks continued, and Craig decided that his situation was untenable, and he had to leave.

To make sure he did, he was leaked his way out, up to the day before he planned to resign. What caused so many Obama supporters’ stomachs to turn was that Obama could have stopped the leaking at any time; he or White House Chief of Staff Rahm Emanuel could have arranged a dignified departure. (They’re within their rights to get rid of someone if they’re dissatisfied, for good reasons or not – but a preferred route would be to call that person in and ask what day would suit him or her to resign, and then just let that person do it. This happens a lot in administrations; even if people don’t believe the resignation was voluntary, there’s a soupcon of dignity left to that person.) Even some Hillary Clinton supporters, who still hold no brief for Craig, think he was treated shabbily.

And this opinion is not confined to “political junkies.” Thomas Wilner, a distinguished Washington attorney who challenged Bush administration detainee policies, particularly on Guantanamo, and had worked with Craig on these issues, told me, “There's a lot of concern among a lot of lawyers in this town, especially those who were supporting Obama, that somebody this bright, this respected, this good, and with this integrity, was treated in such a way."

Yes, we knew, or should have, during the campaign that the supposed idealist Obama had a bit of the Chicago cut-throat in him, but there was little sign that he could be as brutal and heedless of loyalty as he was in the Craig affair. An unexpected climate of fear emanates from the Obama White House.

The incident underscored worries that several had held about the Obama White House for some time: that it was too tightly controlled and narrowly focused by the Chicago crowd; that it seemed from the outset to need an older, wiser head, someone with a bit more detachment.

The current crowd displays a certain impulsiveness and vindictiveness that do it no good – as in the silly war-let on Fox News that it is now trying to back out of. Even if Craig was making a hash of his job – and there’s no independent evidence of this – it just wasn’t smart to treat someone widely held in such high respect in this manner; once again, the impulsiveness backfired.

The replacing of Craig with Washington attorney Robert Bauer, Obama’s own attorney for years as well as counsel for the Democratic National Committee and the Obama campaign, further narrowed the White House circle just when it needed broadening, lowered the stature of the office, and choosing the president’s personal attorney for a position that calls for dispassionate judgment is hazardous. (Does anyone remember Alberto Gonzalez?)

The Obama’s themselves hang tight with a small Chicago crowd. Yes, he talks to others, and yes, a president’s time is very limited, but the Obama’s themselves seem as closed-off and unto themselves as does his inner White House circle. (Is this a coincidence? What is all this wariness about?) When the Obama’s go to someone’s house for dinner, almost invariably it’s to that of Valerie Jarrett, the old friend from Chicago who serves as a counselor and whom they see all day. Old Chicago friends fly in for weekends frequently. Old friends, who had helped launch him, helped them personally, have been left behind.

At the same time as the Craig imbroglio happened, many people who had defended Obama against charges that he wasn’t what he’d been cracked up to be were now becoming concerned themselves: though it was a relief to have a president who thought through crucial decisions about sending the country’s young to war, it was taking him awfully long to make up his mind about what to do about Afghanistan and Pakistan, and the decision-making was bafflingly leak-ridden (was this a deliberate airing of ideas or a loss of control over the process?); that the health care debate had in fact careened out of his control and it seemed less and less likely that, having used up almost a year of his presidency on it (his “deadlines” had become irrelevant, and so, in a way, had he), he would end up with a bill, if at all, that did enough net good.

Certain things are not his fault: the unprecedented truculence of the Republican Party, scared silly by right-wing ranters on cable television; the unholy economic and foreign-policy mess that he inherited; the fact that he never had, as so many liberal commentators asserted, the 60 (or 58 or 59) Senate votes that would enable him to get what he wanted from the Congress. It’s not his fault that unemployment rates remain stubbornly high following a traumatic recession.

And it’s always risky to project the long-term from the moment. Perhaps this will prove to have been a passing moment. Perhaps Obama will still salvage a health care bill that is a real step forward (though there will be a humongous fight over its definition); maybe he’ll come up with a smart strategy – or the best of bad options – on Afghanistan and Pakistan; it’s not impossible that he’ll add real progress on climate change and regulatory reform to his list of achievements, and that he’ll start to get the deficit under control.

Maybe there’ll be enough examples of grace that will make people forget this period of pettiness. He’s been lucky before; maybe he’ll get lucky again. Meanwhile, serious people who had a lot of hope about him and who defended him are more worried than ever, and in this if anything over-communicative society the White House can’t write them off as “a bunch of Washington insiders.” So meanwhile, there’s a palpable mood change in Washington that could signify that Barack Obama is in deeper trouble than he was even a week ago.



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Sources: Politico, MSNBC, The Daily Beast, Wikipedia, VisitingDC, Google Maps

Tim Geithner Told To Resign...Summers' Head Wanted On A Platter Too

Geithner Asked To Resign; "Mr. Secretary, The Public Has Lost All Confidence In Your Ability To Do Your Job"


A heated exchange erupted on Capitol Hill today as Treasury Secretary Timothy Geithner was explicitly asked to resign.

The ranking House Republican on the Joint Economic Committee, Kevin Brady of Texas, ticked off a litany of economic concerns and perceived economic failures, adding that there's a "growing liberal consensus" that Geithner has failed as Treasury Secretary, and that "conservatives agree that as the point person on the economy, you've failed," before he asked Geithner: "Will you step down from your post?"

Geithner defended his track record, declined to step down, and added, "I agree with almost nothing of what you said... and almost nothing of what you said regarding the economy is accurate."

Geithner went on to say, reports The Hill:

"Again, it's just a basic fact: A year ago, this economy was falling at the rate of 6 percent a year. We were losing between half a million and three-quarters of a million jobs a month," he added, noting those numbers changed direction when President Barack Obama took office.

Brady quickly responded:

"Mr. Secretary, the public has lost all confidence in your ability to do your job. Conservatives agree... liberals agree... it is time for a fresh start." He added that Geithner's failure was beginning "to reflect on your president."

To which Geithner shot back, "If you look at any measure of confidence... it is substantially stronger today [than when the President took office]."

"Tell all of that to the millions of American who no longer have jobs because of your decisions," Brady said. "At some point you have to take some responsibility for your decisions."

Sources: Huffington Post, The Hill, CNBC, NY Mag, AP, Youtube, Google Maps

"Too Big To Fail" Has Voters Steaming...Whitehouse's Progress Too Slow

Progress slowed on "Too Big to Fail" decision

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Arianna Huffington comments on people and political parties

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Sources: MSNBC, Google Maps

Obama's "Too Big To Fail" Bill Coming Monday

(Volcker: Risk of "too big to fail" remains. Paul Volcker, former Fed chairman, testifies to the House Financial Services Committee on the issue of Systemic Risk and the best way to deal with it.)

Visit msnbc.com for Breaking News, World News, and News about the Economy

New US bill on "too big to fail" fix seen Monday


The Obama administration plans to unveil on Monday a new plan for dealing with troubled financial giants, said a senior U.S. lawmaker, who also mentioned potentially big changes for the insurance industry.

Barney Frank, chairman of the House Financial Services Committee and a chief architect of the financial regulation overhaul, declined on Friday to give details on the administration's new bill, which would give the government the power to dismantle large financial companies that get into crises.

The new draft bill is expected to take a tougher stance toward troubled financial firms than the administration's original plan, and may take out some language that would allow for temporary bailouts.

Giving the government "resolution authority" would serve as a rebuttal to the concept that some firms are too big to fail. Federal Reserve Chairman Ben Bernanke on Friday highlighted the need for this authority as well as other measures to reduce the likelihood that one firm could destabilize the financial system.

Frank also said Congress is discussing whether to create an optional federal charter for insurers.

Insurance companies are currently regulated by the states.

"If we do get into national chartering it will be in life insurance ... and maybe large commercial entities," Frank said during remarks to a banking symposium.

He said lawmakers would not likely try to federally regulate property and casualty insurers, however.

NO SUPER BANK COP

Frank's committee has cranked its efforts to overhaul financial regulation into high gear in recent days.

On Thursday it voted to approve legislation that would create a federal financial consumer watchdog. It has also passed new rules to police over-the-counter derivatives like the credit default swaps that helped fuel the financial crisis, and the full House has approved efforts to curb abusive pay practices.

While Frank's committee has made significant headway, the reform effort faces an uncertain future in the Senate and may be pushed into next year.

One idea that does seem to be gaining steam in the Senate is the move to consolidate all federal banking supervision into one super agency. Currently, four regulators share responsibility.

Christopher Dodd, chairman of the Senate Banking Committee, is a leading advocate of the consolidation, and has said he will push it forward despite regulators' reservations.

Frank, however, does not think it will pass.

"There is no remote chance of it happening," he said.

He said lawmakers will likely merge the Office of Thrift Supervision and the Office of the Comptroller of the Currency, but allow the Federal Reserve and the Federal Deposit Insurance Corp to keep their supervisory roles.

Frank also commented on the rulings of pay czar Kenneth Feinberg, who on Thursday slashed compensation for many of the top earners at seven firms that have received billions of dollars in taxpayer funds.

"I think he did a good job," he said.

On the same day that Feinberg released his rulings for the seven firms, the Federal Reserve revealed its own pay guidelines to encompass a larger chunk of financial firms.

The Fed's bank pay guidelines, while not specific, are designed to curb forms of compensation that entice employees to take large risks.

Frank said the Fed's guidelines should have a large impact and said Congress is working to finalize legislation that would clarify that the Fed does have the authority to closely police pay.



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Sources: Reuters, Huffington Post, MSNBC, CNBC, Zimbio, Google

Did Tim Geithner & Larry Summers Sign Off On BOFA-Merrill Lynch Deal?

(Who do Larry Summers and Tim Geithner really work for? Pres. Obama, American Voters or Wall Street? The Young Turks)




(June 10, 2009: Inside Bank of America's Purchase of Merrill Lynch - Internal E-mails Raise Questions About Bernanke and Paulson Role in BofA-Merrill Deal (Bloomberg News)






Bank of America deal had White House support

Top economic advisers to President Obama signed off on a deal to protect Bank of America from losses incurred by its purchase of failed Wall Street firm Merrill Lynch a month before the new administration took office, according to Bank of America documents.

The documents, describing internal discussions at the bank in late 2008, assert that executives were told that incoming National Economic Council Director Lawrence H. Summers and incoming Treasury Secretary Timothy F. Geithner had endorsed the deal to provide new guarantees to Bank of America.

The acquisition has been a source of protracted debate since earlier this year, when questions arose about whether federal officials exerted an inappropriate amount of pressure on Bank of America to complete the deal. There's also been debate about whether the bank made appropriate disclosures to its shareholders about losses at Merrill Lynch, its negotiations with the government for additional support and compensation plans at Merrill Lynch.

These issues have been the subject of investigations by the House Oversight and Government Reform Committee, the Securities and Exchange Commission and New York's attorney general.

The documents, which were obtained by The Washington Post and are in the hands of committee investigators, are the clearest sign that top Obama officials agreed with the Bush administration and the Federal Reserve's approach.

Bank of America chief executive Kenneth D. Lewis told the company's board that Federal Reserve Chairman Ben Bernanke told him "that Geithner and, in addition, Larry Summers, were both on board with the transaction," according to Dec. 22 talking points prepared for a conference call.

A Dec. 29 e-mail from Joe Price, Bank of America's chief financial officer, to Lewis and others said he had talked to Federal Reserve Governor Kevin Warsh.

He indicated that "we had the strongest assurances" that Bernanke "will survive the administration change" and that then-Treasury secretary Henry M. Paulson Jr. and Geithner, his eventual replacement, "were all aware and in agreement with the representations made to Ken Lewis in the discussions."

Treasury spokesman Andrew Williams said: "After being named as Treasury secretary nominee, Geithner was recused from any issues involving individual banks, including Bank of America. It was perfectly natural and appropriate that the incoming Treasury secretary would be kept apprised of key developments but he was not making decisions for the Government."

White House spokesman Matthew A. Vogel said Monday that "Summers had occasional briefings by Federal Reserve officials during the transition but did not make, review or approve decisions regarding financial institutions during that time."




John Thain Pops Champagne at News of Ken Lewis’s Departure


Ken Lewis was too tuckered out and, frankly, has way too much paperwork to sort out before he can begin properly celebrating his retirement from Bank of America. But one person who didn't waste any time getting the party started was John Thain, the Merrill Lynch executive Lewis ousted soon after BofA took over the firm last year.

Sources told The Post that the former Merrill Lynch boss spent yesterday quietly celebrating the resignation of Bank of America CEO Ken Lewis and hopes Lewis' downfall might help Thain repair his damaged reputation on Wall Street.

By "quietly," we assume they're not referring to the actual noise level as strains of "I Will Survive" and "I'm Still Standing" could be heard reverberating down the corridors of the former New York Stock Exchange head's apartment building for hours after the news was announced.

Folks were cracking the bubbly inside Bank of America, too, it seems, as one "top BofA official" felt loose enough to disclose to the Post that Lewis was

"A combative mother****** with a chip on his shoulder [who] not only looked for a fight but also relished it."

Then again, it's entirely possible he meant that as a compliment.




FBI looking into BofA-Merrill deal

The FBI in Charlotte and the U.S. Justice Department are among the multitude of agencies investigating Bank of America Corp.'s acquisition of Merrill Lynch & Co., a knowledgeable source told the Observer Friday.

The criminal investigation has been under way for about six months, the source said. The probe means an additional layer of scrutiny for the Charlotte-based bank, which bought Merrill on Jan. 1.

Bank of America already faces investigations from the New York attorney general's office, the Securities and Exchange Commission and the N.C. attorney general's office. Those probes have largely focused on the payment of billions in Merrill bonuses before the deal closed and the lack of disclosure of Merrill's ballooning fourth-quarter losses.

The previously disclosed investigations of the bank have appeared to largely involve civil matters that could lead to financial or regulatory penalties against the bank, or fines against some of its leaders.

The FBI involvement opens the possibility of criminal charges, although the scope and possible outcome of the probe remain unclear.

FBI spokeswoman Amy Thoreson and Justice Department spokesman Ian McCaleb said they could neither confirm nor deny the existence of an investigation.

Bank of America spokesman Jim Mahoney declined to confirm whether the FBI or Justice Department were investigating the bank, but he said there are "various government agencies that are continuing to look at the issues associated with Merrill Lynch." He said the agencies extend beyond the SEC and the New York and N.C. attorneys general.

"We continue to believe that no action is imminent, nor that there is any basis for any action," Mahoney said of the investigations.

The bank has provided hundreds of thousands of documents and dozens of hours of executive time in response to the agencies' requests, he said.

In securities filings in February and August, Bank of America said it was cooperating with inquiries from "governmental authorities" in regard to the Merrill merger and bonuses paid to employees for 2008, but it didn't specify agencies other than the SEC.

In testimony to Congress this week, FBI director Robert Mueller said the agency has over 100 agents assigned to more than 580 open corporate fraud investigations. He did not disclose any of the companies. In March, he testified that the agency had more than 566 corporate fraud investigations, including "matters directly related to the current financial crisis."

Meanwhile, the office of N.C. Attorney General Roy Cooper has stepped up its civil investigation by hiring a Loyola University Chicago law professor to help review documents and possible legal claims, according to a contract obtained by the Observer under a public records request. Steven Ramirez, a former SEC enforcement attorney, can make up to $10,640 for work through March, according to the contract.

In February, Cooper's office requested information from Bank of America about Merrill bonuses and its receipt of extra government assistance to complete the Merrill deal. In addition to bonuses, the investigation is beginning to look at how losses were calculated at Merrill in late 2008, according to a person familiar with the investigation.

Earlier this week, U.S. District Judge Jed Rakoff rejected Bank of America's $33 million settlement with the Securities and Exchange Commission over allegations that the bank misled investors about bonuses paid to Merrill employees. Rakoff ordered both parties to prepare for a Feb. 1 trial, although it's unclear how the SEC will proceed.

The office of New York Attorney General Andrew Cuomo is also reportedly preparing to file civil charges against unspecified Bank of America executives in coming weeks. Cuomo's office also is expected to subpoena the Bank of America directors who served on the bank's board at the time of the acquisition, expanding the investigation beyond the bank's management.



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Sources: Washington Post, NY Times, NY Mag, Washington Independent, Bloomberg News, McClatchy Newspapers, Charlotte Observer, The Young Turks, Youtube, Google Maps

Obama Admin. Faces Pressure To Stop Bleeding Job Loss Crisis...Help Detroit

(Scuffles erupted as several thousand Detroit residents jockeyed, pushed and shoved Wednesday to get free money being offered to only 3,500 of the city's recently or soon to be homeless.)




(Should Pres. Obama turn his focus to the Job Market?)

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(Jobless claims fall. Jobless claims fall by 33,000 to 521,000, topping expectations. CNBC's Rick Santelli shares his analysis.)

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White House Faces Pressure on Jobs


Eight months after enacting a massive economic stimulus package, the Obama administration is facing rising pressure from some congressional Democrats to move more aggressively to jump-start the moribund job market and try to spur a housing recovery.

For the lawmakers, the imperative is clear: to get the job market back on track before midterm congressional elections in November 2010. While mainstream economists credit the $787 billion stimulus package passed in February for helping stabilize the economy, the unemployment rate reached 9.8 percent in September and is widely forecast to keep rising in the coming months.

But the White House, which is juggling priorities -- including a health-care overhaul, big changes to financial regulation and a proposal to combat global warming -- is reluctant to take on another far-reaching task. And in a time of large budget deficits, administration officials are particularly eager not to do anything that would be characterized as another stimulus act or tagged as wasteful spending.

Many Democrats -- especially in the House -- favor moving swiftly to bolster the job market after they pass health-care legislation. The House has already voted to extend unemployment benefits, and the Senate may do so next week. Support is already building around a plan to extend an $8,000 tax credit for first-time home buyers, which was included in the first stimulus package but is slated to expire Nov. 30. And lawmakers are discussing a wide range of other ideas, including a tax credit for businesses that create jobs, additional tax incentives for businesses to invest in equipment, and a large package of new transportation projects.

"There are some initiatives that we must do," particularly extending unemployment insurance, House Speaker Nancy Pelosi (D-Calif.) told reporters Thursday. "What is it that we can afford? What works the fastest? We have to get those judgments," she said, adding that she will consult with economists in the coming weeks about which policies might best help.

Pelosi also said that extending the tax credit for first-time home buyers is "under consideration," as is whether to extend such a credit to other buyers.

The White House is moving cautiously, weighing proposals from Capitol Hill and beyond but disinclined to combine them into one broad, potentially expensive bill that would draw fire from Republicans, administration officials said. Rather, the administration wants to enact some policies through the regular budget process and avoid those that do not directly support the job market.

"It is a real balancing act between worrying about the job problem and making sure you are squeezing every job you can out of every dollar that is spent," said an administration official who spoke on the condition of anonymity to discuss ongoing deliberations. Administration officials said no decisions are imminent on what ideas President Obama will endorse, and they note that only about half the stimulus money has been spent.

Democratic leaders in Congress are struggling under the twin pressures of a rising jobless rate and a soaring federal budget deficit. The Congressional Budget Office reported this week that the deficit hit $1.4 trillion in the fiscal year that ended in September. Representing nearly 10 percent of the overall economy, the deficit is the highest since World War II. Polls show the public is increasingly concerned about the rising tide of red ink, particularly as lawmakers contemplate a vast and expensive restructuring of the nation's health-care system.

But many Democratic leaders in Congress tend to view joblessness as the more immediate political concern. The entire House and many senators will face voters next November, and some political analysts say Democrats stand a good chance of losing control of the lower house unless they develop a more effective plan for creating jobs.

"We're certainly myopically focused on getting health care done. But at the same time, this caucus and the leadership are focused on job creation and what we need to do to put Americans back to work," said Rep. John B. Larson (Conn.), the No. 3 Democrat in the House, who has been calling publicly for another big package of transportation spending. "Jobs is uppermost in our minds."

On Thursday, Rep. Charles B. Rangel (D-N.Y.), the chairman of the tax-writing Ways and Means Committee, endorsed an extension of the home-buyer credit, saying, "There's no question, I think it should be extended." But Rangel said it would be "too expensive" to make the credit permanent or offer it to all home buyers, as some have suggested. Democratic aides said extending the credit would cost more than $1 billion per month.

Republicans, who have pilloried the administration for ongoing job-market woes despite the previous stimulus package, argued that any new stimulus package should focus on tax cuts.

"I think everyone knows that American families and small businesses continue to struggle," said House Minority Leader John A. Boehner (Ohio). "These high unemployment rates are not coming down. The stimulus is not working. And some of the policies that are continuing to be promoted here are not going to help the situation; they are going to make it worse.

The difficulty lawmakers face in enacting new spending is reflected in the bickering over a plan to extend emergency unemployment benefits for another three months -- an idea that many independent economists consider a "no-brainer," as IHS Global Insight chief financial economist Brian Bethune put it.

The House approved a bill to extend benefits in states where the jobless rate is 8.5 percent or higher two weeks ago, but the measure has since faltered in the Senate. On Thursday, Senate Democrats resolved a dispute over how broadly to distribute the benefits, offering a $2.4 billion plan that would grant up to 14 additional weeks of benefits to workers in all 50 states while offering up to 20 additional weeks to jobless workers in the hardest-hit states. The measure would be fully paid for by extending the federal unemployment tax through June 2011.

Republicans objected to efforts to speed the bill to a vote in the full Senate, however. And while Senate Minority Leader Mitch McConnell (R-Ky.) has said that Congress should act to extend unemployment benefits, he has questioned the need for broader spending on the economy.

"When you get into the very high levels of unemployment we'll be struggling with next year, not extending benefits threatens to undermine not only the spending of households under that stress, but the very fragile confidence of everyone else," said Mark Zandi, chief economist of Moody's Economy.com, who was consulted by lawmakers as they crafted the original stimulus bill.

Another open question is whether to extend the $8,000 tax credit for first-time home buyers. The program is widely credited with helping the housing market stabilize by driving up existing-home sales, home construction and housing prices in recent months.

And that has spinoff benefits: People buying a house tend to spend money on furniture and upgrades, and higher home prices make people feel wealthier and reduce losses by banks on foreclosures. On the other hand, the program has been expensive, and its benefits accrue to people who are already affluent enough to buy a home.

Meanwhile, liberal economists are urging Democrats to consider public-works programs and another round of aid to states, including many that are facing budget cuts projected to cost 700,000 jobs over the next two years. "States either have to raise taxes or cut spending. And when they cut spending, they lay people off and buy fewer products and services from the private sector," said Ross Eisenbrey, vice president of the Economic Policy Institute, a labor-oriented research organization.

Rep. Chris Van Hollen (D-Md.), who leads the campaign committee tasked with electing Democrats to the House, said there's no consensus within his party about how far to go beyond the initial stimulus package.

"If the assessment is the economy is picking up steam, you would want to continue to do the safety-net stuff, but you would not want to get into another big package that was not paid for," he said. "But if you determined the economy was not improving as expected, then you would consider the other option."

While White House officials say they have yet to settle on a strategy, they add that economic problems will continue until unemployment falls to more acceptable levels.

"The president is happy that GDP is growing," said a senior official, who spoke on the condition of anonymity to discuss the internal deliberations. "But he says unless we see some serious job creation, we are nowhere near out of the woods."



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Sources: Washington Post, The New Yorker, MSNBC, CNBC, AP, Youtube, Google Maps

Obama Administration's New Financial Regulations To Include....

MSNBC----

In conjunction with the Fed’s authority over large financial institutions and the new consumer agency, President Obama also will propose:

-Additional protections for investors, including greater disclosure by hedge funds; regulation of credit default swaps and over-the-counter derivatives that previously operated outside of government oversight; and new conditions on brokers and originators of asset-backed securities.

-A system for the orderly disposition of any troubled, interconnected firm whose failure poses a risk to the entire financial system, together with rules that insist that financial institutions hold more capital to avoid over-leveraging.

Obama’s plan does not attempt major consolidation of turf-conscious regulatory agencies and does not inject itself into an ongoing debate over whether to bring some insurance companies under federal oversight.

“We don’t want to tilt at windmills,” Obama said on CNBC.

Obama’s decision to create a consumer agency comes amid criticism that mortgage lenders and credit card companies have taken advantage of unwitting customers and saddled them with debt.

The new regulator would have the power to demand that customers have the option of simple financial products, to impose fines and to allow states to pass laws that are stricter than the federal standards. Consumer protections are now spread among various state and federal authorities, including the Fed, the Securities and Exchange Commission, the Federal Trade Commission and banking regulators.

Financial lobbyists rallied against the new agency, saying it’s impossible to separate bank regulation from oversight of the products they offer.

“We’re supposed to be trying to plug holes and connect dots” with the regulatory overhaul, said Scott Talbott, top lobbyist with the Financial Services Roundtable. “The consumer regulator idea moves in the opposite direction.”

Sen. Chuck Schumer, D-N.Y., called the new consumer products agency “the cornerstone of regulatory reform.” The Fed and other banking regulators, he said, were too focused on the “safety and soundness” of the institutions they oversee, and “did not do a very good job of protecting consumers.”

Rep. Bill Delahunt, a Massachusetts Democrat who has helped write a consumer protection bill in the House, said: “Here we are just beginning to extract ourselves from this mess that was on the cusp of total collapse, and the banks don’t want further regulations. Give me a break.”

The administration will also have to use its political skills to strengthen the Fed. While Democrats generally agree with a need for regulatory changes, many oppose a Fed with expanded powers.

Democratic Sen. Christopher Dodd of Connecticut, chairman of the Senate Banking, Housing and Urban Affairs Committee, has advocated an alternative plan to strip the Fed of its regulatory role entirely and create a new consolidated bank regulator that would assume the roles that the Fed and Federal Deposit Insurance Corp. now play in helping regulate state-chartered banks.

Dodd, however, is a strong proponent of a consumer protection agency and is likely to champion that component of Obama’s plan.

Sources: MSNBC, Bitter Queen, Wikipedia

Obama Administration To Establish Consumer Financial Protection Agency

Politico----

President Barack Obama on Wednesday will call for the creation of a Consumer Financial Protection Agency as part of his long-awaited plan for overhauling the nation’s market regulatory structure in response to last year’s meltdown, administration officials tell POLITICO.

The promise to “re-regulate” the wounded Financial system after the go-go years is one of the centerpieces of the president’s agenda, in a year when he’s taking on many of the nation’s most complex problems all at once. Officials call the overhaul by far the biggest since the 1930s.

The new independent agency — which Obama will begin talking up in a series of interviews on Tuesday afternoon — will look after consumers on matters like credit cards, with “a very clear line of accountability around products that they deem abusive of consumers, or misleading,” a senior administration official said.

The consumer agency is one of the proposals in a Treasury Department “white paper” of 85-plus pages that outlines what the White House calls a “comprehensive plan for new rules of the road for the financial industry.”

The plan, to be unveiled by Obama Wednesday, does not ban specific financial products, and officials decided to “harmonize rules” among existing regulators rather than orchestrates a widespread elimination or consolidation of agencies, as they had considered at the outset. The plan eliminates the Office of Thrift Supervision, the weakest of the regulators.

The Federal Reserve will get more power, but there will be no new “super-regulator” like Britain’s Financial Services Authority.

Under a process led by Treasury Secretary Tim Geithner and the White House, administration officials started with a more theoretical approach that one participant called “a pure, design-it-from-scratch system.”

Over months of meetings, the administration team moved toward a proposal that officials say is more practical and limited — and more likely to pass Congress and work effectively.

“We thought we would fight the wars of necessity, not of choice,” the official said.

“The big idea is to fix the problems that originated this crisis — to really go after what was at the core of this problem, which was gaps in regulations, and an approach that was purely focused on different kind of institutions, without anyone looking at the system as a whole.”

Officials discussed banning certain kinds of derivatives, but decided that would be ineffective. “The people in the financial system are, and will continue to be, pretty innovative,” the official said. “They’ll find other ways to accomplish the same things. Even though it might be politically popular, it’s sort of a fool’s errand. You’re better off focusing on the whole structure and the whole system, harmonizing the rules and reducing arbitrage."

Some commentators will argue the plan goes easy on Wall Street. But the financial industry is likely to complain enough to mute such criticisms.

Many of the plans require congressional approval, but some can be accomplished by the administration through executive authority.

The consumer agency will have the ability to set rules and conduct investigations. Administration officials expect that lawmakers will want to have a hand in defining the agency’s mandate, so some flexibility has been left in the plans.

“The idea is to consolidate a lot of these regulators that dabble in the consumer, but it’s sort of a second-tier issue,” the official said.

Administration officials expect the idea will appeal to the left, although it may make conservatives nervous.

Officials considered giving the functions to the Federal Trade Commission. “But they don’t really have banking experience, so we thought it was cleaner to start something afresh,” the official said.

In addition to the creation of the consumer agency, four key elements of the plan are:

-Regulate asset- and mortgage-backed securities. Geithner and White House economic adviser Larry Summers wrote in The Washington Post on Monday that their plan will “impose robust reporting requirements on the issuers of asset-backed securities; reduce investors' and regulators' reliance on credit-rating agencies; and, perhaps most significant, require the originator, sponsor or broker of a securitization to retain a financial interest in its performance.”

— Give more power to the Federal Reserve as the primary regulator of big, interconnected firms. The Fed will be able to trigger a “wind-down” of a problem firm. This “workout authority” is a loss for Sheila C. Bair, chairman of the Federal Deposit Insurance Corporation, who wanted to take the lead in this area. Instead, she will be one of the regulators. “The view of this team was that if you’re going to have a lead on a complex, big institution, then it ought to be the Fed,” the official said.

-Rename the President’s Working Group on Financial Markets — sometimes referred to as the “Plunge Protection Team,” for its role in financial emergencies — as a council that will advise the Fed, and continue to advise the president and the Treasury. The group will continue to be run out of Treasury. “The idea is to beef that up, make it stronger, give it statutory authority and make it a formal adviser to the systemic risk regulator,” the official said.

— Retain the 50-state regulation system for insurance, rather than create a national regulator. Create a federal Office of Insurance Information (OII) within Treasury, so insurers will have someone to call in a crisis. The idea was introduced by Rep. Paul Kanjorski (D-Pa.).

Some in the White House worry that the urgency for the overhaul has dissipated as the economy has begun showing signs of recovery, and now that Capitol Hill is bogged down with health care and energy legislation. But top officials say it would have been a mistake to rush a shoddy plan up to Congress. And while these officials worry about lawmakers’ workload, they expect to get their framework through after the usual changes of the legislative process.

Administration officials are optimistic that the House Financial Services Committee, chaired by Rep. Barney Frank (D-Mass.) will embrace as many as 90 percent of the ideas. “We’ve taken the time to consult, and the consultative process has surfaced a lot of the things that we think typically would have tripped this stuff up,” an official said.

The Senate will be tougher, and Sen. Chris Dodd (D-Conn.), chairman of the Banking Committee, is overloaded because of reelection worries back home and his role as fill-in chairman of the health committee while Sen. Ted Kennedy (D-Mass.) is away for health reasons.

But administration officials think that once the House moves the legislation, Dodd might be persuaded to follow. And Dodd might realize that because of his political vulnerability, he has an incentive to push the bill.

Sources: Politico, TIME, Washington Times

Obama Administration Lays Out Framework For Financial Regulation (Summers & Geithner)

Washington Post----

Over the past two years, we have faced the most severe financial crisis since the Great Depression. The financial system failed to perform its function as a reducer and distributor of risk. Instead, it magnified risks, precipitating an economic contraction that has hurt families and businesses around the world.

We have taken extraordinary measures to help put America on a path to recovery. But it is not enough to simply repair the damage. The economic pain felt by ordinary Americans is a daily reminder that, even as we labor toward recovery, we must begin today to build the foundation for a stronger and safer system.

This current financial crisis had many causes. It had its roots in the global imbalance in saving and consumption, in the widespread use of poorly understood financial instruments, in shortsightedness and excessive leverage at financial institutions. But it was also the product of basic failures in financial supervision and regulation.

Our framework for financial regulation is riddled with gaps, weaknesses and jurisdictional overlaps, and suffers from an outdated conception of financial risk. In recent years, the pace of innovation in the financial sector has outstripped the pace of regulatory modernization, leaving entire markets and market participants largely unregulated.

That is why, this week -- at the president's direction, and after months of consultation with Congress, regulators, business and consumer groups, academics and experts -- the administration will put forward a plan to modernize financial regulation and supervision. The goal is to create a more stable regulatory regime that is flexible and effective; that is able to secure the benefits of financial innovation while guarding the system against its own excess.

In developing its proposals, the administration has focused on five key problems in our existing regulatory regime -- problems that, we believe, played a direct role in producing or magnifying the current crisis.

First, existing regulation focuses on the safety and soundness of individual institutions but not the stability of the system as a whole. As a result, institutions were not required to maintain sufficient capital or liquidity to keep them safe in times of system-wide stress. In a world in which the troubles of a few large firms can put the entire system at risk, that approach is insufficient.

The administration's proposal will address that problem by raising capital and liquidity requirements for all institutions, with more stringent requirements for the largest and most interconnected firms. In addition, all large, interconnected firms whose failure could threaten the stability of the system will be subject to consolidated supervision by the Federal Reserve, and we will establish a council of regulators with broader coordinating responsibility across the financial system.

Second, the structure of the financial system has shifted, with dramatic growth in financial activity outside the traditional banking system, such as in the market for asset-backed securities. In theory, securitization should serve to reduce credit risk by spreading it more widely. But by breaking the direct link between borrowers and lenders, securitization led to an erosion of lending standards, resulting in a market failure that fed the housing boom and deepened the housing bust.

The administration's plan will impose robust reporting requirements on the issuers of asset-backed securities; reduce investors' and regulators' reliance on credit-rating agencies; and, perhaps most significant, require the originator, sponsor or broker of a securitization to retain a financial interest in its performance.

The plan also calls for harmonizing the regulation of futures and securities, and for more robust safeguards of payment and settlement systems and strong oversight of "over the counter" derivatives. All derivatives contracts will be subject to regulation, all derivatives dealers subject to supervision, and regulators will be empowered to enforce rules against manipulation and abuse.

Third, our current regulatory regime does not offer adequate protections to consumers and investors. Weak consumer protections against subprime mortgage lending bear significant responsibility for the financial crisis. The crisis, in turn, revealed the inadequacy of consumer protections across a wide range of financial products -- from credit cards to annuities.

Building on the recent measures taken to fight predatory lending and unfair practices in the credit card industry, the administration will offer a stronger framework for consumer and investor protection across the board.

Fourth, the federal government does not have the tools it needs to contain and manage financial crises. Relying on the Federal Reserve's lending authority to avert the disorderly failure of nonbank financial firms, while essential in this crisis, is not an appropriate or effective solution in the long term.

To address this problem, we will establish a resolution mechanism that allows for the orderly resolution of any financial holding company whose failure might threaten the stability of the financial system. This authority will be available only in extraordinary circumstances, but it will help ensure that the government is no longer forced to choose between bailouts and financial collapse.

Fifth, and finally, we live in a globalized world, and the actions we take here at home -- no matter how smart and sound -- will have little effect if we fail to raise international standards along with our own. We will lead the effort to improve regulation and supervision around the world.

The discussion here presents only a brief preview of the administration's forthcoming proposals. Some people will say that this is not the time to debate the future of financial regulation, that this debate should wait until the crisis is fully behind us. Such critics misunderstand the nature of the challenges we face. Like all financial crises, the current crisis is a crisis of confidence and trust. Reassuring the American people that our financial system will be better controlled is critical to our economic recovery.

By restoring the public's trust in our financial system, the administration's reforms will allow the financial system to play its most important function: transforming the earnings and savings of workers into the loans that help families buy homes and cars, help parents send kids to college, and help entrepreneurs build their businesses. Now is the time to act.


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Sources: Washington Post, Google Maps