Salon.com > Dodd-Frank

5 hard truths progressives must face about Obama

Mon, 19 Nov 2012 21:12:00 +0000

Terrorized by the prospect of a complete takeover of the U.S. government by right-wing reactionaries—progressive Democrats swallowed their unhappiness with Barack Obama throughout the campaign. They gamely defended his policies on the economy, health care, budget priorities and other issues on which they felt betrayed in his first term.

We’ve now dodged the bullet of a Mitt Romney White House, so let’s get back to reality. Despite his campaign-trail populism, the president will continue the politics of accommodation to conservatives. Two of the three priorities he has set out for his next term are at the top of the GOP agenda: a “grand bargain” to cut government spending over the next 10 years and corporate tax reform that would cut rates—don’t hold your breath—and close loopholes. The third priority, rationalizing immigration law, is one of the few progressive ideas that also has the support of the Chamber of Commerce and the Business Roundtable.

Will Wall Street be punished?

Fri, 09 Nov 2012 12:45:00 +0000

Who is ready to shed a tear for Wall Street? The moguls bet big, and lost. Now, if we are to believe their whining, they are preparing to pay the piper.

“We played the old Beatles song ‘The Taxman,’ on our trading floor this morning,” bond fund uber-manager Bill Gross told Bloomberg on Thursday.

Oh lordy, hard times are coming!

Although, you know, those times might not be quite so hard as the days back in the mid-'60s when George Harrison felt himself compelled to complain about a 95 percent "super tax." If, during the negotiations to avoid the "fiscal cliff," President Obama plays a level of hardball that was in short supply for most of his first term, the wealthiest Wall Streeters might see a return to Clinton-era income tax rates on the rich. Anything more meaningful, like a hike in the tax rate on capital gains, or an end to the exemption for carried interest, will require a major breakthrough -- successfully bashing through the obstructionism of House Republicans who seem unlikely to accede to any elements of Obama's agenda, no matter how forcefully the president seeks them.

Obama: Wall St. should alter pay incentives

Wed, 24 Oct 2012 15:03:00 +0000

WASHINGTON (AP) — President Barack Obama, who once called bank executives "fat cats" and their pay "obscene," says Wall Street needs to change executive pay incentives that reward risky bets that can yield fortunes but can also devastate financial institutions.

In an interview with Rolling Stone magazine, Obama says that despite congressional passage of a financial regulation overhaul in 2010, there still are not enough adequate means of holding risk takers in the industry accountable if their investment schemes fail.

"You still have a situation where people making bets can get a huge upside, and their downsides are limited," Obama says in the edition that hits newsstands on Friday. "So it tilts the whole system in favor of very risky behavior."

The wide ranging interview with presidential historian Douglas Brinkley covered topics ranging from Republican presidential challenger Mitt Romney's secretly recorded remarks to donors about Obama supporters to Supreme Court Chief Justice John Roberts' tie-breaking decision declaring Obama's health care plan constitutional.

Mitt’s question-mark economy

Wed, 24 Oct 2012 13:42:00 +0000

As we close in on Election Day, the questions about what Mitt Romney would do if elected grow even larger. Rarely before in American history has a candidate for president campaigned on such a blank slate.

Yet, paradoxically, not a day goes by that we don’t hear Romney, or some other exponent of the GOP, claim that businesses aren’t creating more jobs because they’re uncertain about the future. And the source of that uncertainty, they say, is President Obama — especially his Affordable Care Act (Obamacare) and the Dodd-Frank Act, and uncertainties surrounding Obama’s plan to raise taxes on the wealthy.

In fact, Romney has created far more uncertainty. He offers a virtual question mark of an economy.

For example, Romney says if elected he’ll repeal Obamacare and replace it with something else. He promises he’ll provide health coverage to people with pre-existing medical problems but he doesn’t give a hint how he’d manage it.

Insurance companies won’t pay the higher costs of insuring these people unless they have extra funds — which is why Obamacare requires that everyone, including healthy young people, buy insurance. Yet Romney doesn’t say where the extra money to fund insurers would come from. From taxpayers? Businesses?

Hedge funds shrug off Dodd-Frank

Mon, 15 Oct 2012 16:10:00 +0000

The Dodd-Frank bank reform act has always worked perfectly as prism for determining partisan alignment. Conservatives see it as burdensome over-regulation that will unfairly constrict the banking industry and slow overall economic growth. Liberals see it as a hopelessly co-opted toothless compromise, gutted by special interests. The reaction to the law works as a perfect metaphor for the Obama administration's overall record -- take your pick: outrage or disappointment.

Well, we finally have some data that casts light on both narratives. On March 12, 2012, a provision of Dodd-Frank requiring hedge fund managers to register with the Securities and Exchange Commission and provide information about their trading activities came into effect. Three months later, Wulf Haal, a law professor at the University of St. Thomas in Minneapolis, sent a survey to 1,264 "private fund advisers" asking them questions about the costs associated with complying with the new regulations:

Guess what? The sky isn't falling...

Goldman Sachs can’t take a joke

Tue, 09 Oct 2012 15:21:00 +0000

Money can't buy you a thick skin. That's the takeaway from a Wall Street Journal article published today that reports how Goldman Sachs turned against Obama.

The last straw for many came two weeks later. At the annual White House Correspondents Dinner, the president drew laughs at their expense. "All of the jokes here tonight are brought to you by our friends at Goldman Sachs," Mr. Obama said, referring to the SEC allegations. "So you don't have to worry -- they make money whether you laugh or not."

Goldman Sachs ought to have been pleased at Obama's crack -- it's more of an advertisement for their services than an insult. The mystique, and profitability, of Goldman Sachs is built on the company's ability to make money in any market. Goldman was the first big investment bank on Wall Street to figure out which way the subprime wind was blowing, and it got out of its most dangerous positions (often by dumping toxic waste on its own clients) well before its competitors. Getting called out by name by the president should be taken as a sign of respect!