Here we go again. Another round of the game we call Congressional Creep. After months of haggling and debate, Congress finally passes reform legislation to fix a serious rupture in the body politic, and the president signs it into law. But the fight’s just begun, because the special interests immediately set out to win back what they lost when the reform became law.
They spread money like manure on the campaign trails of key members of Congress. They unleash hordes of lobbyists on Capitol Hill, cozy up to columnists and editorial writers, spend millions on lawyers who relentlessly pick at the law, trying to rewrite or water down the regulations required for enforcement. Before you know it, what once was an attempt at genuine reform creeps back toward business as usual.
It’s happening right now with the Dodd-Frank Wall Street Reform and Consumer Protection Act – passed two years ago in the wake of our disastrous financial meltdown. Just last week, for example, both parties in the House overwhelmingly approved two bills that already would change Dodd-Frank’s rules on derivatives — those convoluted trading deals recently described by the chairman of the Commodity Futures Trading Commission as “the largest dark pool in our financial markets.”
Especially vulnerable is a key provision of Dodd-Frank known as the Volcker Rule, so named by President Obama after the former Federal Reserve Chairman Paul Volcker. It’s an attempt to keep the banks in which you deposit your money from gambling your savings on the bank’s own, sometime risky investments.
It will come as no surprise that the financial sector hates the Volcker Rule and is fighting back hard.
On March 26, Robert Schmidt and Phil Mattingly at Bloomberg News published an extensive account on the coordinated campaign being waged by the banking industry to persuade regulators to scale back reform. Headlined “Bank Lobby’s Onslaught Shifts Debate on Volcker Rule,” their report chronicles the many ways in which banks are turning up the heat, enlisting the help of clients, customers and other companies, among others. “Some banks recommended consultants and law firms,” they write, “… to help clients write letters arguing that the proposed language defines proprietary trading too broadly. Partnering with trade associations, the banks also commissioned studies, tested messages with focus groups, distributed talking points and set up a phone hotline for Capitol Hill staffers.”
The banks found another ally in the U.S. Chamber of Commerce, the biggest pro-business lobby in America, which helped put together a coalition of companies, including Boeing, DuPont, Caterpillar and Macy’s department stores.
In one instance, the banking behemoth Credit Suisse got an assist from a man named Robert Auwaerter, who oversees hundreds of billions as the fellow in charge of the fixed income group at Vanguard Group, a mutual fund company. He came to a briefing Credit Suisse held for three congressmen who belong to the New Democrats, a group of House members known “for their centrist and pro-business leanings.”
Auwaerter led the 90-minute meeting and said the three Democrats “were really receptive to our comments.” We’ll just bet. According to the Bloomberg News reporters, one of them, Joe Crowley of New York, “pushed back at one point, telling the group that he’d recently marched in a Lunar New Year parade in Queens with Thomas DiNapoli, the New York State Comptroller who oversees a state retirement fund of about $140 billion. Why wasn’t DiNapoli complaining about Volcker?
“The asset managers told Crowley they have a closer view of how the markets work than the pension funds that hire them. The proposed rule, they said, would slow bond trading, making it harder for them to execute their strategies. They predicted that would mean lower returns for funds like DiNapoli’s, as well as for 401(k) plans and individual investors.
“Less than two weeks after the Credit Suisse visit, 26 New Democrats signed a letter to regulators noting that ‘millions of public school teachers, police officers and private employees depend on liquid markets and low transaction costs’ to retire with ‘dignity and ease.’”
In other words, fellow members and regulators, lighten up on the Volcker Rule! A thick wallet helps, of course — lobbyists for the financial sector spent nearly half a billion dollars last year. And the congressional newspaper The Hill reports, “Members of Congress pressuring regulators to go easy on the ‘Volcker Rule’ received roughly four times as much on average in contributions from the financial industry than lawmakers pushing for a stronger rule since the 2010 election cycle, according to Public Citizen, a left-leaning group advocating for strict implementation.
“When it is all added up, opponents of a tough Volcker Rule received over 35 times as much from the financial industry — $66.7 million — than advocates for a strong stance, who received $1.9 million.”
All of which makes it darkly amusing to read in the April 4 edition of the financial newspaper The American Banker that, in the words of Roger Beverage, president and CEO of the Oklahoma Bankers Association, “Congress isn’t afraid of bankers. They don’t think we’ll do anything to kick them out of office. We are trying to change that perception.”
Which is why Beverage and his colleague are creating the industry’s first super PAC. They’re calling it – we’re not making this up – “Friends of Traditional Banking,” a smokescreen of a sobriquet if we ever heard one, vaguely reminiscent of the Chicago mobsters in Billy Wilder’s Some Like It Hot who dub themselves “Friends of Italian Opera.”
Matt Packard, the super PAC’s chairman, told The American Banker, “If someone says I am going to give your opponent $5,000 or $10,000, you might say, ‘Yea, okay.’ But if you say the bankers are going to put in $100,000 or $500,000 or $1 million into your opponent’s campaign, that starts to draw some attention.” Don Childears, president and CEO of the Colorado Bankers Association chimed in, “It would be nice to sit on the sidelines or sit on our hands and say, ‘Oh we don’t get involved in that stuff,’ but that just means you get run over. We need to get more deeply involved as an industry in supporting friends and trying to replace enemies.”
All of which demonstrates, as per Bloomberg News, “that four years after Wall Street helped cause the worst economic downturn since the Great Depression and prompted a $700 billion taxpayer bailout, its lobby is regaining its power to blunt or deflect efforts to rein in the banks.”
Nonetheless, just last week, The Wall Street Journal reported on how a movement to challenge big banks at the local level has gained momentum around the country. Activists want to restructure Wall Street from the bottom up. As a result, the Los Angeles City Council is considering an ordinance that would gather foreclosure and other data on banks that do business with the city. Officials in Kansas City, Mo., passed a resolution directing the city manager to do business only with banks that are responsive to the community. And here in New York City, legislation is pending to require banks to reinvest in local neighborhoods if they want to hold city deposits. Similar actions are underway in other cities.
They’re turning up the heat. You can, too.
Over the years we’ve been reporting on how power is monopolized by the powerful. How corporate lobbyists, for example, far outnumber members of Congress. And how the politicians are so eager to do the bidding of donors that they allow those lobbyists to dictate the law of the land and make a farce of democracy. What we have is much closer to plutocracy, where the massive concentration of wealth at the top is protects and perpetuates itself by controlling the ends and means of politics. This is why so many of us despair over fixing what’s wrong: we elect representatives to change things, and once in office they wind up serving the deep-pocketed donors who put up the money to keep change from happening at all.
Here’s the latest case in point. The airwaves belong to all of us, right? They’re part of “the commons” that in theory no private interest should be able to buy or control. Nonetheless, government long ago allowed television and radio stations to use the airwaves for commercial purposes, and the advertising revenues have made those companies fabulously rich. But part of the deal was that in return for the privilege of reaping a fortune they would respect the public interest in a variety of ways, including covering the local news important to our communities. If they didn’t, they would be denied their license to use the airwaves at all.
Alas, over the years, through one ruse or another, the public has been shafted. We heard the other day of a candidate for office in a Midwest state who complained to the general manager of a TV station that his campaign was not getting any news coverage. “You want coverage?” the broadcaster replied. “Buy some ads and then we’ll talk!”
That pretty well sums up the game. But hold your nose: It gets worse. The media companies and their local stations – including goliaths like CBS and Rupert Murdoch’s News Corp – stand to pull in as much as $3 billion this year from political ads. Three billion dollars! And most of that money will pay for airing ugly, toxic negative ads that use special effects, snide jokes and flat out deception to take us to the lowest common denominator of politics.
The FCC, the Federal Communications Commission, which is supposed to make sure the broadcasters don’t completely get away with highway or, rather, airwave robbery has proposed to the broadcasting cartel that stations post on the Web the names of the billionaires, and front organizations – many of them super PACs — paying for campaign ads. It’s simplicity itself: Give citizens access online to find out quickly and directly who’s buying our elections. Hardly an unreasonable request, given how much cash the broadcasters make from their free use of the airwaves.
But the broadcasting industry’s response has been a simple, declarative “Not on your life!” It would cost too much money, they claim. Speaking on their behalf, Robert McDowell, currently the only Republican commissioner on the FCC – the other one left to take a job with media monolith Comcast — said the proposal is likely “to be a jobs destroyer” by distracting station employees from doing their regular work. The party line also has been sounded by Jerald Fritz, senior vice president of Allbritton Communications, who told the FCC that making the information available on the Internet “would ultimately lead to a Soviet-style standardization of the way advertising should be sold as determined by the government.” We’re not making this up.
Steven Waldman, who was lead author of the report that led to the FCC’s online proposal, quotes a letter from the deans of twelve of our best journalism schools: “Broadcast news organizations depend on, and consistently call for, robust open-record regimes for the institutions they cover; it seems hypocritical for broadcasters to oppose applying the same principles to themselves.”
Hypocritical, but consistent with a business that values the almighty dollar over public service. The industry leaves nothing to chance. Through its control of the House of Representatives, it got a piece of legislation passed this past week euphemistically titled the FCC Process Reform Act. George Orwell must be spinning in his grave – this isn’t reform, it’s evisceration.
Not only does the bill remove roadblocks to more media mergers – further reducing competition – it would subject every new rule and every FCC analysis of that rule to years of paper work and judicial review, enabling the industry’s horde of lawyers and lobbyists, “to throw sand in the works at every opportunity” as one expert puts it. There was a noble attempt by California Congresswoman Anna Eshoo to include in this bill an amendment that, like the FCC proposal, called for stations to post on-line who’s putting up the big bucks for political ads. Shocker — it was rejected. Score another one for the plutocrats.
There is some good news. The White House opposes this latest bid by the broadcasting oligarchy to further eviscerate the public interest. And the fate of the House bill in the Senate is uncertain at best. In the meantime, as far as those political ads go, we’re not totally helpless. Here’s what you can do: Under current law, local television stations still have to keep paper files of who’s paying for these political ads, and they have to make those files available to the public if requested. You can even make copies to take away with you. So just go down to your nearest station, politely ask for the records, and then send the data online to the New America Foundation’s Media Policy Initiative or to the organization of investigative journalists called ProPublica. Both have mounted campaigns to get the information online.
Each is pulling together all the information on political ads they get from you and others — crowdsourcing — and making it available to the entire country via the Internet. If you’re a high school teacher or college professor of journalism, have your students do it and maybe give them classroom credit for collecting the data democracy needs to work.
In other words, here’s a way citizens can take action even against the plutocrats who run Big Media and Congress.
Neither of us is old enough to have been fooled by the Trojan Horse (see Wikipedia). But we each have been working in public television decades enough to remember the days when distribution was handled by physically transporting bulky 2-inch videotapes from station to station — “bicycled” was the word — and much of the broadcast day and night was devoted to blackboard lectures, string quartets and lessons in Japanese brush painting: The old educational television versions of reality TV.
Yet it also was a time of innovation and creativity. As the system evolved we saw bold experiments like “PBL — the Public Broadcasting Laboratory” and Al Perlmutter’s “The Great American Dream Machine,” each a predecessor to the commercial TV magazine shows “60 Minutes” and “20/20.” The TV Lab, jointly run by David Loxton at WNET in New York and Fred Barzyk at WGBH in Boston, nurtured and encouraged the first generation of video artists — Nam June Paik, Bill Viola and William Wegman among others — and the early documentary work of such video pioneers as Jon Alpert and Keiko Tsuno of the Downtown Community Television Center, Alan and Susan Raymond, and the wild and woolly, guerrilla camera crews of TVTV.
The descendants of those pathfinders are the independent filmmakers whose works have not only re-energized the motion picture industry but also have vastly expanded the realm of the documentary — in both the scope of its storytelling and the size and diversity of its audience. Public television has faithfully provided an enormous national stage where non-fiction films can be seen by far more people than could ever buy tickets at the handful of movie houses willing to put documentaries up on their theater screens.
As Gordon Quinn of the independent documentary company Kartemquin Films (“Hoop Dreams”) told Anthony Kaufman of the website IndieWire, “In terms of having an audience in a democratic society, in terms of getting people talking about things, there’s nothing like a PBS broadcast. PBS is free, and it’s huge in getting into rural areas. That reach, all over the country, it’s a critically important audience that’s vastly underserved.”
Two PBS series have provided outstanding showcases for the work of new and established documentarians and between them have 13 Oscar nominations and 54 Emmys to prove it. For years, “Independent Lens” and “P.O.V.” held a nationwide time slot as part of the PBS core schedule on Tuesday nights, with public TV stalwart “Frontline” as a worthy lead-in, funneling to the independent films just the kind of audience that enjoys and appreciates documentaries.
But this season, PBS chose to move “Independent Lens” and “P.O.V.” to a new time slot — 10 pm, ET, on Thursday nights. This may not seem like such a big deal at first, until you know that on Thursday nights stations can broadcast any program they like in prime time, whether it’s part of the PBS schedule or not. Many take the opportunity to offers viewers locally produced programs, British sitcoms or reruns of “Antiques Roadshow.” As a result, episodes of the independent documentary series can now be run anywhere local stations choose to fit them in (here in New York, WNET airs the films at 11 pm on Sundays) or maybe not at all.
“P.O.V.” does not begin the new season — its 25th — until June, but as Dru Sefton first reported in the public broadcasting trade publication Current, in the first few months since “Independent Lens” was shuffled into its new Thursday time slot last October, ratings plummeted 42 percent from the same period last season. With programs scattered throughout the schedule in different cities, not only is it now more difficult for viewers to find them but coordinated national advertising and promotion campaigns are, at best, extremely difficult.
The team at PBS consists of dedicated people; all are our colleagues and many are our friends. They are constantly looking for ways to increase the audience that watches public television. But there is always a danger, in any organization, of only seeing the world from the top down, and then counting heads to measure whether something is good or not. An open letter to PBS from Kartemquin Films says it well:
Public television is not just a popularity contest, or a ratings game. Taxpayers support public broadcasting because democracy needs more than commercial media’s business models can provide. PBS’ programming decision makes a statement about PBS’ commitment to the mission of public broadcasting.
It goes on to note the mandate cited in the recently revised and reissued Code of Editorial Integrity for Local Public Media Organizations: “Our purposes are to support a strong civil society, increase cultural access and knowledge, extend public education, and strengthen community life through electronic media and related community activities.”
Most of both our careers have been in public television. Our affection and gratitude for it abideth, but we are not blind to the problems. Public broadcasting’s ever-tenuous funding places it in a perpetual dilemma and forces it into a delicate balancing act. PBS provides programming like “Independent Lens” and “P.O.V.” that may not garner the most viewers but helps fulfill its essential mission of public service — and, candidly, attracts grants from kindred spirits who believe in a robust mix of ideas and visions. But to lure a wider audience, it also airs what our neighborhood diner calls “lighter fare” — whether entertaining, upscale imports like “Downton Abbey,” home-grown, how-to programs like “This Old House” or (during pledge drives) nostalgic reruns of folk musicians, pop crooners, and financial and spiritual gurus — aimed at older viewers with, presumably, more disposable income.
Add to this the constant political pressures, especially from conservative politicians ever eager to cut off its funding (Mitt Romney says he wants to see commercials on “Sesame Street”), plus the self-censorship that all too often results, and you get a tendency toward orthodoxy and an aversion to controversy.
A PBS spokesperson told The New York Times that the service “is fully committed to independent films and the diversity of content they provide.” That can quickly be demonstrated by reversing a bad decision and returning to a national core time slot the independent documentaries created — often at real financial sacrifice — by the producers and filmmakers whose own passion is to reveal life honestly and to make plain, for all to see, the realities of inequality and injustice in America.
Along with its open letter to PBS, Kartemquin Films published a petition and asked for signatures from independent filmmakers and their supporters. We two are among the more than 300 who have signed it as of this writing. If you think the creativity and unique visions of life captured by independent producers, journalists, and filmmakers deserve the best possible platform on public television, you can read and sign it yourself.
The effort has made a difference. Talks are ongoing and the Times reports that PBS now has “agreed to find a new home next season” for the two series. An announcement is expected to be made at the PBS annual meeting in May. That’s good news, but until the decision is made, it’s important to keep letting them know how you feel — write PBS or sign that petition.
Growing up Protestant in a small town in upstate New York, the commemoration of Lent was not as major an event as it would be in, say, a Catholic household. We didn’t give up chocolate or gum or anything else for those 40 days between Ash Wednesday and Easter, nor did most of the grown-ups we knew forsake any of their particular pleasures or bad habits.
When I was 12, one night a week during Lent was spent in religious training before becoming a member of our church at a service on Maundy Thursday (what Catholics and many others call Holy Thursday, the day of The Last Supper). But baptism was a prerequisite for membership and I had not yet been christened in the Congregational Church we attended; neither had my parents or my younger brother and sister. So all five heathens were lined up in the living room one Monday evening, and our minister quickly did the deed with a glass of tap water. Then we had cake.
My other powerful memory of the Lenten season is weekly religious breakfasts on cold Wednesday mornings. I was in high school and it meant waking up even earlier than usual on frigid winter days and getting a ride to the parsonage.
Yawning protests to the contrary, those meals were worth it. In that big, white-framed house, we were greeted with the sweet maternal warmth of the minister’s wife, enormous platters of food, and a brief talk by the minister on the Eastertime meaning of it all, preaching repentance and redemption but suffused more with brightness than brimstone. Afterward, each of us walked the few remaining blocks to school, our breath in frosty flumes, full of bacon, scrambled eggs and a certain pious self-satisfaction. No fasting for us.
All of which came to mind while learning that today, some churches are taking matters into their own hands and delivering one of the most powerful Lenten messages ever. According to the progressive website ThinkProgress, “As congregations across the country observe the period between Ash Wednesday and Easter by sacrificing and repenting, religious leaders are asking big banks that have wrongfully foreclosed on homeowners and exacerbated the pain of the housing crisis to do the same.”
On Ash Wednesday, churches in San Francisco announced they were removing $10 million from Wells Fargo and called on the bank, as per the advocacy group Faith in Public Life, “to put an immediate freeze on its foreclosures and repent for their misconduct.” The March 9 New York Times reported that “The Rev. Richard Smith of St. John the Evangelist, an Episcopal church in San Francisco, likened the divestment campaign and public protests to early Christianity’s ritual of ‘reconciliation of the penitents.’ Far from taking place in the private sanctity of the confessional, that rite occurred in public, with the penitent overseen by a priest and required to present himself before a bishop.”
“’It seemed like a parallel to us,’ said Mr. Smith, 62. ‘Our banks have done a great deal of damage in a very public way. So it seems appropriate as we enter into a season of penitence that we invite those who separated themselves from the community to repent with us. It’s basically ‘Ethics 101.’”
The effort is part of several national campaigns to get consumers and community groups to remove their money from the big banks and transfer accounts to credit unions and smaller financial institutions. Travis Waldron at ThinkProgress wrote, “Religious organizations have been at the forefront of movements to get consumers to move their money. The New Bottom Line, a coalition of faith groups, pledged to move $1 billion this year, and before Thanksgiving, churches moved $55 million away from Wall Street banks with pledges to remove as much as $100 million more.”
Occupy Wall Street has been in the lead, as has the Move Your Money project – its website even includes a handy locator that lists credit unions and community banks near your zip code. On the November 5 “Bank Transfer Day,” some 40,000 moved their money out of the nation’s biggest banks, but according to the consulting firm Javelin Strategy and Research, the event actually had a much wider impact. In a January 26 report, Javelin estimated, “5.6 million U.S. adults with a banking relationship changed providers in the past 90 days. Of those switchers, 610,000 U.S. adults (or 11 percent of the 5.6 million) cited Bank Transfer Day as their reason and actually moved their accounts from a large to a small institution.”
The March 2 Los Angeles Times noted, “Consumers fed up with the rising tide of bank fees helped the nation’s credit unions more than double their number of new customers last year… More than 1.3 million Americans opened new credit union accounts last year, up from less than 600,000 in 2010, the National Credit Union Administration reported. That brings the number of credit union members to a record 91.8 million.”
As a result of all this, CNN Money reported last November, “The nation’s 10 biggest banks could stand to lose as much as $185 billion in deposits in the next year due to customer defections, according to cg42, a Wilton, Connecticut-based management consulting firm that has conducted research for several of the nation’s top banks.” Sounds like a lot, but keep in mind those same ten banks hold retail deposits of $2.04 trillion.
Nonetheless, public opinion and the post-meltdown, Dodd-Frank financial regulations have the banks and other financial institutions scrambling, while they continue to scream in protest and lobby on Capitol Hill against the ignominy of reform. On March 12, that $25 billion foreclosure abuse settlement was filed by the federal government and 49 states – Oklahoma was the holdout – with Ally Financial, Bank of America, Citigroup, J.P. Morgan Chase and Wells Fargo. Twenty billion of it will be used to give a break to military and the unemployed, reduce principal for delinquent or near default loans and refinance mortgages already underwater. Another billion and half will provide some small restitution to people whose homes were sold or foreclosed upon. But as the Associated Press pointed out, “About 11 million American households are ‘underwater’ on their mortgages, meaning they owe more than their homes are worth,” but the settlement “is expected to reduce loans for only about 1 million.”
We’re told that the banks, desperate when thrown a lifeline by taxpayers in 2008, are now stronger and better able to weather a crisis than they were. 15 of the 19 largest financial firms passed the Federal Reserve’s latest stress test. Regardless of whether we as individuals could survive, the test asks, according to The New York Times, “whether banks would have enough capital to weather a peak unemployment rate of 13 percent, a 21 percent drop in housing prices and severe market shocks, as well as economic slowdowns in Europe and Asia.”
“The Fed’s stress tests assumed that the 19 banks would be slammed with $534 billion of losses in just over two years. Even after such hits, most banks would emerge with adequate capital…” But one of those that failed was Citigroup, our third largest, the one that took the most government assistance during the meltdown – and this in the wake of last week’s announcement that in 2011 the bank paid CEO Vikram Pandit nearly $15 million in total compensation, including a cash bonus of more than $5 million, his first since the 2008 crash.
What’s more, the Times said the tests revealed to the Fed that, “In business loans — called commercial and industrial loans by bankers — Citi and U.S. Bancorp had the worst portfolios, while Wells Fargo and Fifth Third had the shakiest credit card portfolios. In commercial real estate, regional banks appear to be the most vulnerable.” Swell.
There’s still a lot to be angry about, still good reason to contemplate transferring your money or at least filing with the new Consumer Financial Protection Bureau if you have a complaint about your mortgage, deposit accounts or credit cards. As former Goldman Sachs executive director Greg Smith said in this week’s bombshell Times op-ed announcing his resignation, “It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.”
Jeff Horwitz at the financial daily American Banker this week exposed J.P. Morgan Chase’s credit card services division, reporting that it “took procedural shortcuts and used faulty account records in suing tens of thousands of delinquent credit card borrowers for at least two years,” sparking an investigation by the Office of the Comptroller of the Currency. “The bank’s errors could call into question the legitimacy of billions of dollars in outstanding claims against debtors and of legal judgments Chase has already won, current and former Chase employees say.” As Rolling Stone’s Matt Taibbi observed, “Countless credit card borrowers would now have collection agents chasing them for money they did not owe,” and in some cases, according to a key witness, Chase actually owed the customer money.
Allegedly one of Chase’s more pernicious practices was “robosigning,” the mass production and signing of credit-related affidavits without any semblance of verification, an illegal shortcut similar to the one that plagued the mortgage market and one of the targets of a new report from the inspector general of the Department of Housing and Urban Development.
“Managers at major banks ignored widespread errors in the foreclosure process,” the Times reports, “in some cases instructing employees to adopt make-believe titles and speed documents through the system despite internal objections… the report concludes that managers were aware of the problems and did nothing to correct them. The shortcuts were directed by managers in some cases…” In one of the more blatant falsifications, a Wells Fargo employee whose prior work experience was at a pizza parlor was named a bank vice president.
Inspector General David Montoya said, “I believe the reports we just released will leave the reader asking one question — how could so many people have participated in this misconduct? The answer — simple greed.”
Simple greed – hey banks, how about giving that up for Lent?
Facts are stubborn things, said founding father John Adams, a basic truth Ronald Reagan famously mangled at the Republican National Convention in 1988, when he tried to quote Adams and declared, “Facts are stupid things,” before correcting himself.
Nonetheless, in practice, certain financial and political leaders seem to embrace Reagan’s verbal misstep as closer to reality than Adams’ original aphorism. Witness the resistance on the part of banking institutions and certain members of the congressional leadership, despite regulations demanding that they allow facts and figures to be reported, information that could keep us from the edge of yet another economic meltdown.
The March 5 Wall Street Journal reported that as the Federal Reserve prepares to release the results of the latest round of stress tests, evaluating how banks would respond in the event of another severe financial crisis, “Bankers are pressing the Fed to limit its release of information — expected as early as next week — to what was published after the first test of big banks in 2009.”
“Three years ago, as the financial crisis was abating, the Fed published potential loan losses and how much capital each institution would need to raise to absorb them. This time around, the Fed has pledged to release a wider array of information, including annual revenue and net income under a so-called stress scenario in which the economy would contract and unemployment would rise sharply.”
The banks cite competitive concerns, but regulators “view full disclosure as critical to assuaging investor concerns about banks’ capacity to withstand a market shock or economic setback.” Add to the mix the banks’ fear of further government interference – when it’s of the nonbailout variety, that is – and continued resistance to the new rules imposed by the Dodd-Frank Wall Street Reform and Consumer Protection Act. In any case, they’re being assured by the Fed that it won’t release data “that rivals could mine for future acquisitions or other moves,” such as quarterly breakouts of projected losses.
Banks also are dragging their heels over a requirement that arose from last November’s G-20 meeting. Representatives of 19 of the biggest industrial and emerging nations, plus the European Union, decreed that the world’s largest banks – including eight from the United States – must create “living wills,” plans that lay out what they would do in the event of another crisis, including how banks could be stabilized or even shut down.
The wills are an idea that makes perfect sense. Think of them as a business model for the apocalypse. But drafts of the banks’ projected scenarios are due by June and must be completed by the end of the year, and the Financial Times reports, “Independent research showed only one bank out of 29 globally considered itself to have finished a draft recovery and resolution plan, according to a survey by Ernst & Young … ”
“Living wills form a critical part of global efforts to avoid a recurrence of the 2008 financial crisis, when governments in the U.S., UK and elsewhere were forced to shell out billions of dollars in taxpayer funds to rescue troubled financial institutions. Some bankers also hope that regulators will reward institutions that write credible plans that allow an easier wind up with lower capital requirements.”
Off the record, bankers in the United States and the U.K. told the Financial Times that “cross-border disagreements among regulators were proving to be the biggest hurdle to writing comprehensive plans.”
Meanwhile, Simon Johnson, the savvy MIT and former International Monetary Fund economist, warns that if the Republican Party takes over both the House and Senate, they may attempt to force the heretofore nonpartisan Congressional Budget Office (CBO), which evaluates the impact of the federal legislature’s fiscal proposals, to switch to a scoring system “that would attach magical growth implications to tax cutting.”
At the Baseline Scenario website, Johnson writes:
“If you cut taxes, revenues will fall and deficits will increase. If you change the CBO’s scoring process to hide this fact — as is under consideration by leading Republicans on the House Budget Committee and the House Ways and Means Committee — you are engaging in exactly the same sort of deception that brought down Greece.”
So whether bankers or politicians, it’s those at the top — and not the facts — that are being stubborn. And maybe that other thing Ronald Reagan said facts were, too.
We haven’t even turned the page on the controversy over contraceptives, health care and religious freedom when another thorny one arises involving personal conscience and public health. A flurry of stories over the past few days coincided with seeing a movie that inspires more than passing interest in their subject.
Steven Soderbergh’s film “Contagion” came out a few months ago and was inexplicably and completely frozen out of the Oscar nominations. But it is the most plausible experience of a global pandemic plague you’re likely to see until the real thing strikes. With outstanding performances from an ensemble cast that includes Matt Damon, Kate Winslet, Gwyneth Paltrow and Laurence Fishburne,”Contagion” is stark, beautiful in its own terrifying way, and all-too-believable. The story tracks the swift progress of a deadly airborne virus from Hong Kong to Minneapolis and Tokyo to London — from a handful of peanuts to a credit card to the cough of a stranger on a subway. Rarely does a film issue such an inescapable invitation to think: it could happen; that could be us. What would we do?
With “Contagion” making such a powerful impression, for several days news articles seemed to keep popping up about contagious disease and the conflict between religious beliefs and immunization. There was nothing new about the basics: All 50 states require some specific vaccinations for kids, yet all of them grant exemptions for medical reasons – say, for a child with cancer. Almost all of them grant religious exemptions. And twenty states allow exemptions for personal, moral, or other beliefs.
According to the February 15 edition of The Wall Street Journal, a number of pediatricians are dropping families from their practices when the parents refuse immunization for their kids. “In a study of Connecticut pediatricians published last year,” the paper reported, “some 30 percent of 133 doctors said they had asked a family to leave their practice for vaccine refusal, and a recent survey of 909 Midwestern pediatricians found that 21 percent reported discharging families for the same reason.” They add:
By comparison, in 2001 and 2006 about 6 percent of physicians said they “routinely” stopped working with families due to parents’ continued vaccine refusal and 16 percent “sometimes” dismissed them, according to surveys conducted then by the American Academy of Pediatrics.
But some parents still fear a link between vaccinations and autism, a possibility science has largely debunked. Some parents just want to be in charge of what’s put into their children’s bodies, as one West Virginia politician puts it. And some parents just don’t trust science, period — a few have even been known to fake religion to avoid vaccinating their kids. So there are many loopholes. But now seven states are considering legislation to make it even easier for mothers and fathers to spare their children from vaccinations, especially on religious grounds.
In Oregon, according to a story by Jennifer Anderson in The Portland Tribune, the number of kindergartners with religious exemptions is up from 3.7 percent to 5.6 percent in just four years, and continuing to rise. This has public health officials clicking their calculators and keeping their eye on what’s called “herd immunity.” A certain number of any population group needs to have been vaccinated — 80 percent for most diseases, 92 percent for whooping cough – to maintain the ability of the whole population — “the herd” — to resist the spread of a disease.
Ms. Anderson offers the example of what used to be called “the German measles” – rubella. All it takes are five unvaccinated kids in a class of 25 for the herd immunity to break down, creating an opportunity for the disease to spread to younger siblings and other medically vulnerable people who can’t be vaccinated. If you were traveling to Europe between 2009 and 2011, you may remember warnings about the huge outbreak of measles there, brought on by a failure “to vaccinate susceptible populations.”
Here in the United States, several recent outbreaks of measles have been traced to pockets of unvaccinated children in states that allow personal belief exemptions. The Reuters news service recently reported 13 confirmed cases of measles in central Indiana. Two of them were people who showed up to party two days before the Super Bowl in Indianapolis. Patriots and Giants fans back east were alerted. So far, no news is good news.
But this is serious business, made more so by complacency. Older generations remember when measles killed up to 500 people a year before we started vaccinating against them in 1963. The great flu pandemic of 1918 killed ten times more Americans than died in the Great World War that ended that year and took the lives of as many as forty million globally. Our generation was also stalked by small pox, polio, and whooping cough before there were vaccinations.
In a country where few remember those diseases, it’s easy to think, “What’s to worry?” But as the movie “Contagion” so forcefully and hauntingly reminds us, the earth is now flat. Seven billion people live on it, and our human herd moves on a conveyer belt of perpetual mobility, so that a virus can travel as swiftly as a voice from one cell phone to another.
When and if a contagion strikes, we can’t count on divine intervention to spare us. That’s when you want a darn good scientist in a research lab. We’ll need all the help we can get from knowledge and her offspring.
Traders gather at the post that handles Global Payments Inc. on the floor of the New York Stock Exchange, Monday, April 2, 2012, in New York (Credit: AP Photo/Richard Drew) 
Screenshot from an ad paid for by the Red, White and Blue Fund, a pro-Santorum super Pac 
Occupy Wall Street demonstrators march to a Wells Fargo Bank as part of the protest in downtown Oakland, Calif., Friday, Nov. 4, 2011. Two mothers withdrew their savings from the bank. Saturday is Bank Transfer Day for supporters to take their money out of major banks and put their money into smaller banks. (Credit: AP/Paul Sakuma) 
A trader looks up at the board just after the closing bell on the floor of the New York Stock Exchange, February 27, 2012. (Credit: Reuters/Brendan McDermid) 
Kate Winslet in "Contagion" 