http://www.readersupportednews.org/opinion/82-82/2451-new-finance-bill-a-molehill-not-a-mountain
The New Finance Bill: A Mountain of Paper, a Molehill of Reform By Robert Reich, Robert Reichs Blog: 17 July 2010 Thursday the President pronounced that "because of this [financial reform] bill the American people will never again be asked to foot the bill for Wall Street's mistakes." As if to prove him wrong, Goldman Sachs simultaneously announced it had struck a deal with federal prosecutors to pay $550 million to settle federal claims it misled investor - a sum representing a mere 15 days profit for the firm based on its 2009 earnings. Goldman's share price immediately jumped 4.3 percent, and the Street proclaimed its chair and CEO, Lloyd ("Goldman is doing God's work") Blankfein, a winner. Financial analysts rushed to affirm a glowing outlook for Goldman stock. Blankfein, you may recall, was at the meeting in late 2008 when Tim Geithner and Hank Paulson decided to bail out AIG, and thereby deliver through AIG a $13 billion no-strings-attached taxpayer windfall to Goldman. In a world where money is the measure of everything, Blankfein's power and influence have grown. Presumably, Goldman can expect more windfalls in future years. Although the financial reform bill may have clipped some of Goldman's wings - its lucrative derivative business may require Goldman to jettison its status as a bank holding company, and the access to the Fed discount window that comes with it - the main point is that the Goldman settlement reveals everything that's weakest about the financial reform bill. The American people will continue to have to foot the bill for the mistakes of Wall Street's biggest banks because the legislation does nothing to diminish the economic and political power of these giants. It does not cap their size. It does not resurrect the Glass-Steagall Act that once separated commercial (normal) banking from investment (casino) banking. It does not even link the pay of their traders and top executives to long-term performance. In other words, it does nothing to change their basic structure. And for this reason, it gives them an implicit federal insurance policy against failure unavailable to smaller banks - thereby adding to their economic and political power in the future. The bill contains hortatory language but is precariously weak in the details. The so-called Volcker Rule has been watered down and delayed. Blanche Lincoln's important proposal that derivatives be traded in separate entities which aren't subsidized by commercial deposits has been shrunk and compromised. Customized derivates can remain underground. The consumer protection agency has been lodged in the Fed, whose own consumer division failed miserably to protect consumers last time around. On every important issue the legislation merely passes on to regulators decisions about how to oversee the big banks and treat them if they're behaving badly. But if history proves one lesson it's that regulators won't and can't. They don't have the resources. They don't have the knowledge. They are staffed by people in their 30s and 40s who are paid a small fraction of what the lawyers working for the banks are paid. Many want and expect better-paying jobs on Wall Street after they leave government, and so are shrink-wrapped in a basic conflict of interest. And the big banks' lawyers and accountants can run circles around them by threatening protracted litigation. Why do you think Goldman got off so easily from such serious charges of fraud? Reliance on the discretion of regulators rather than structural changes in the banking system plays directly into the hands of the big banks and their executives and traders who contribute mightily to Democratic and Republican campaigns. The flow of money virtually guarantees that regulatory agencies won't be adequately staffed to enforce the law, that penalties for violations won't be overly onerous, and that all loopholes (what's a "derivative"? what has to be listed on exchanges? exactly how much capital must be on hand for which transactions? How are the various forms of predatory lending to be defined?) will be easily stretched in future years. Wall Street lawyers will have a field day. The profit-for-nothing sector of the economy (law, accounting, finance) will continue to grow buoyantly. Make no mistake: As long as there's no fundamental change in the structure of Wall Street - as long as the big banks stay as big and are allowed to grow bigger, and have every incentive to invent new financial gimmicks with which to bet other peoples' money - they will remain too big to fail, and too politically powerful to control. Goldman's share price, as well as those of JP Morgan Chase, Citicorps, Morgan Stanley, and Bank of America, will no doubt soar the basis of the final bill because their future profits are almost guaranteed. The pay of their executives and traders, and of the managers of hedge funds and private-equity funds they deal with, will likewise accelerate. In the short term the economy will benefit, at least to the extent financial entrepreneurship is now the apex of American wealth and innovation. But over the longer term we will be much weaker for it. Congress has labored mightily to produce a mountain of legislation that can be called financial reform, but it has produced a molehill relative to the wreckage Wall Street wreaked upon the nation. Robert Reich is Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written twelve books, including "The Work of Nations," "Locked in the Cabinet," and his most recent book, "Supercapitalism." His "Marketplace" commentaries can be found on publicradio.com and iTunes. *** http://rawstory.com/rs/2010/0716/dcs-spooks-panic-mode-post-expose/ DC's spy establishment in panic mode over Washington Post expose By Daniel Tencer The Raw Story: July 16th, 2010 Washington's intelligence establishment appears to be in panic mode over an upcoming Washington Post series about runaway growth in defense and intelligence spending. A State Department email has accused the Post of planning to make public "top secret" information about defense and intelligence contractors working for the US, despite an admission in the same email that the Post's information came from "open sources." The series, by Pulitzer Prize-winning reporter Dana Priest, will include a TV partnership with PBS's Frontline and is expected to consist of three articles and an online database of military and intelligence contractors and their projects. It's that database of contractors that seems to be worrying Washington the most. Josh Rogin at Foreign Policy reports that the State Department sent out an email Thursday warning all 14,574 Washington-area employees of the upcoming reports. "On Monday July 19, the Washington Post plans to publish a website listing all agencies and contractors believed to conduct Top Secret work on behalf of the US Government," the email stated. "The website provides a graphic representation pinpointing the location of firms conducting Top Secret work, describing the type of work they perform, and identifying many facilities where such work is done." However, the extent to which the Post's information will be "top secret" is debatable. The State Department email goes on to say that the information the Post has gathered came from "open sources," suggesting the information published in the Post's database is already publicly available. The email also tells employees they must "neither confirm nor deny" the claims made in the Post articles. That line is echoed in a letter to "industry partners" from the Office of the Director of National Intelligence. In a blog posting entitled "Is Wash Post Harming Intelligence Work?", the Washington Times reprints the letter from the ODNI, which asks contractors to "remind all cleared employees of their responsibility to protect classified information and relationships." Marc Ambinder at the Atlantic has obtained a memorandum from the ODNI's communications chief, Art House, in which House lays out what he expects to see in the Post series, and his predictions paint a negative picture of defense and intelligence spending over the past decade. House said while he "can't predict the content" of the piece, he expects it will draw several conclusions: The intelligence enterprise has undergone exponential growth and has become unmanageable with overlapping authorities and a heavily outsourced contractor workforce. The IC and the DoD have wasted significant time and resources, especially in the areas of counterterrorism and counterintelligence. The intelligence enterprise has taken its eyes off its post-9/11 mission and is spending its energy on competitive and redundant programs. House also lays out a strategy for an expected public-relations battle after the series' publication: It might be helpful as you prepare for publication to draw up a list of accomplishments and examples of success to offer in response to inquiries to balance the coverage and add points that deserve to be mentioned. In media discussions, we will seek to garner support for the Intelligence Community and its members by offering examples of agile, integrated activity that has enhanced performance. We will want to minimize damage caused by unauthorized disclosure of sensitive and classified information. And Foreign Policy's Rogin reports that the Obama administration is already refuting the Post series, even though it won't launch until Monday. "A lot of this is explainable," an unnamed administration official told Rogin. "You want some redundancy in the intelligence community and you're going to have some waste. These are things we've been aware of and in some instances we agree are troubling. However, it's something we've been working on for a year and a half. It's something we've been on top of." The official went on to say that "there will be examples of money being wasted in the series that seem egregious and we are just as offended as the readers by those examples." ------------------------------------ --------------------------------------------------------------------------- LAAMN: Los Angeles Alternative Media Network --------------------------------------------------------------------------- Unsubscribe: <mailto:laamn-unsubscr...@egroups.com> --------------------------------------------------------------------------- Subscribe: <mailto:laamn-subscr...@egroups.com> --------------------------------------------------------------------------- Digest: <mailto:laamn-dig...@egroups.com> --------------------------------------------------------------------------- Help: <mailto:laamn-ow...@egroups.com?subject=laamn> --------------------------------------------------------------------------- Post: <mailto:la...@egroups.com> --------------------------------------------------------------------------- Archive1: <http://www.egroups.com/messages/laamn> --------------------------------------------------------------------------- Archive2: <http://www.mail-archive.com/la...@egroups.com> --------------------------------------------------------------------------- Yahoo! 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