A problem 30 years in the making

Back in the early 1980’s when John McCain first entered the Senate, the Reagan administration was encouraging savings and loans to compete with banks without having to abide by the same regulations that banks had to. It started a real estate boom fueled by cheap mortgages and risky investments. Commercial office developments sprang up in cities like Phoenix and Dallas and Denver like weeds, but they remained empty.

The Federal Home Loan Bank Board saw the potential for a mess and set rules to limit the amount and kinds of investments that S&Ls could get involved in. Lincoln Savings and Loan Association of Irvine, California, run by Charles Keating III was one of many S&Ls that choose to ignore the rules.

In 1985 Reagan appointed Edwin Grey, a friend of Keatings to the FHLBB. John McCain and four other senators (the “Keating 5”) meet with the FHLBB and the management of Lincoln S&L. Alan Greenspan and McCain both thought that Lincoln should be allowed to keep on conducting business as usual, ignoring the rules. They pressured the board to let Lincoln get by.

In 1987 Lincoln Savings and Loan Association failed, leaving at least 21,000 investors, mainly elderly and retired, loose their life savings. The Resolution Trust Company was formed by the Federal government to bail out Lincoln and hundreds of other S&Ls, The whole bail out cost us tax payers $125 billion.

One of the other S&Ls was Silverado S&L in Denver that cost $1 billion to bail out itself. Neil Bush, one of President George W. Bush’s brothers was on Silverado’s board of directors. Neil settled out of court when the FDIC filed a civil action against him for fraud and conflict of interest.

McCain and Keating were close friends for years. They took vacations together in the Caribbean on Keating’s private jet. McCain failed to report these trips until the Keating 5 came under investigation. Meanwhile, Keating and Lincoln S&L contributed as much as $112,000 to McCain’s senate campaign.

In 1999 Senator Phil Gramm of Texas (up until recently, one of McCain’s “senior” advisors) co-authored the Gramm-Leach-Billey Act which repealed important regulations imposed back in 1933 to control rampant speculation that led to the banking collapse in the Great Depression. Thanks to Gramm, banks could now get directly involved in the stock market and insurance and encouraged mass mergers so that banks like Goldman Sachs and Lehman Brothers could become “too big to fail.”

Within days of the Supreme Court declaring George W. Bush president in 2000, Gramm added the Commodity Futures Modernization Act into the budget bill. The Modernization Act was designed to keep regulators from controlling new financial tools described as credit "swaps,” like sub-prime mortgages bundled up and sold as securities. Under the Gramm law, neither the Securities and Exchange Commission (SEC) nor the Commodities Futures Trading Commission (CFTC) were able to examine financial institutions like hedge funds or investment banks to guarantee they had the assets necessary to cover their potential losses.

Much of the Commodity Futures Modernization Act was written by lobbyists, including a loophole which exempted companies that trade energy futures, like Enron, from being regulated. CFMA also let banks accept lower down payments on homes and offer loans without having to run credit checks, salary checks or asset checks on customers first. Keep in mind that Phil Gramm has been John McCain’s chief economic adviser.

In 2003 Bush tried to privatize regulation of the financial industry, fortunately he couldn’t get it past the Republican majority held Congress. In 2005 John McCain sponsored a Senate bill which would have created an independent (private, non-government) agency to “regulate” the Federal Home Loan Bank Finance Corporation, Fannie Mae, and Freddie Mac. Once again, a Republican Congress knew better than to eliminate all regulation whatsoever.

Now the Bush Administration proposes spending $700 Billion to support banks. And John McCain throws a “hail Mary” by “suspending” his campaign and begging to cancel the Presidential debates.

Incidentally, as of last week, the Iraq war has cost us in the neighborhood of $557 Billion. By the way, Treasury Secretary Henry Paulson is the former CEO of Goldman Sachs. Could it be that or are the very people in government making these decisions looking out for their own personal wealth?

Paulson’s proposal to Congress insists that any decisions he makes with this $700 Billion must be “Non-reviewable and committed to agency discretion, and may not be reviewed by any court or law or any administrative agency.” What? Is he setting himself up to be the banking Czar?

Republicans should be appalled by the bail out proposal because it amounts to socialism, with the federal government taking control of billions of dollars of private assets. Democrats should be vigilant because that much concentrated power in the executive branch in the interest of corporations and billionaires basically meets all the criteria of fascism except the racism.

Be certainly do need to do something, but it should be carefully crafted in a bi-partisan manor and it needs to include more, not less oversight and regulation. CEOs shouldn’t be paid 500 times as much as workers and they certainly shouldn’t be entitled to millions of dollars in compensation packages or pensions when they’ve driven their banks into the ground.

Working stiffs facing foreclosure need to be helped more than Wall Street speculators. Trusting John McCain to get us out of this mess would be like trusting the fox to guard the hen house.

Speculation with other people's money; 1929 and 2008

The Michael Douglas/Charlie Sheen movie "Wall Street" explains that the markets have only two emotions, greed and fear, basically the greed ran things for too long, so now fear is running rampant.

The problem really started with a thing called “the global pool of money.” And if the name “pool” makes you think of gambling, as in “an office football pool,” you’re not too far off. Much of Wall Street’s woes have to do with speculating, risk taking, in other words, gambling.

Families can’t afford to save much anymore, but companies and countries are always saving (sort of). Insurance companies save for a catastrophe, pension funds are supposed to save money for your retirement, etc. etc. All the world’s savings amounts to around 70 trillion dollars. Generally, you want your savings to grow, right? Throughout history, countries and major corporations made really safe boring investments- treasury bonds and municipal bonds.

Part of our problem is prosperity. Thanks to technology and globalization, lots of countries that didn’t used to have much money to save, started to. China, India, Saudi Arabia… whether they made their money selling us TVs or oil, they started doing as well as the US, Japan and Western Europe.

In fact, the global pool of money had doubled since 2000. In 2000 this was about 36 trillion dollars. It took hundreds of years for the world to get to 36 trillion. Then, in six years, to get another 36 trillion So there was twice as much money to invest- the world wasn’t ready for it. Twice as much money to invest, but there definitely not twice as many good investments.

For almost two decades, former Federal Reserve Chairman Alan Greenspan kept the prime interest rate at insanely low levels, as low as one percent. In some ways that was good, it staved off inflation and it meant that people could afford cars, computers, college and houses because the rates we’d have to pay on credit, financing and loans was low.

However, that’s also part of why our personal savings rate is so low- because it’s almost not worth saving money because it doesn’t earn much interest.

This meant that investors and fund managers weren’t going to make any money at all on US treasury bonds. So, they started looking around for some low-risk, high-return investment.

Homeowners were paying 5, 7, 9 percent to borrow money from banks.

Wall Street, already famous for “leveraging” and “short-selling” found a way. Leveraging means borrowing money to lend to someone else who’s a bad risk and short-selling is borrowing stocks so you can sell them now because you expect to be able to buy them back later at a lower price and return it to the real owner and pocket the difference between the two prices.
These money changers in the temple figured out how to get the global pool of money involved in high risk mortgages.

Brokers sell mortgages to small banks. Small banks sells them to big investment firms. The market firm takes thousands of mortgages and puts them together. They had thousands of mortgage checks coming in monthly. They counted on that river coming in for at least thirty years. These were called “mortgage backed securities.”

The problem is, this greedy monster demanded TONS of mortgages, so they started buying up mortgages. Banks couldn’t keep up, so they started lowering their standards. They loaned tons of people mortgages without checking their backgrounds. Many even offered “No Income, No Asset” (NINA) loans.

Bottom line, too many people were too anxious to make too much money too quickly.

Boils down to this, too much laisser-faire (hands off) policy for too long has turned capitalism (ordinarily a good thing) into a cancer. For almost thirty years now, we’ve been following a philosophy of giving tax breaks and unsupervised freedom to big corporations, financial institutions and the super-wealthy in hope that prosperity would “trickle-down.”

But what we see again and again is that rather than re-investing in the American economy and providing jobs- what they do with their profits is to gamble with it in hope of getting even richer, or moving their operations overseas. What makes it worse, is that they don’t just use their profits and their tax cuts- time and time again, they’re using our homes and our retirement funds.

Isn’t it time to return to a philosophy of “we’re all in this together,” “I AM my brother’s keeper,” and of noblesse oblige- “to whom much is given, much is expected.”

Maybe you prefer Reagan to Roosevelt, but I gotta tell you, I think that right about now Wall Street and Washington both need to hear two important quotes from FDR's first inaugural address-

"There is nothing to fear but fear itself" and

"in our progress toward a resumption of work we require two safeguards against a return of the evils of the old order; there must be a strict supervision of all banking and credits and investments; there must be an end to speculation with other people's money, and there must be provision for an adequate but sound currency."

Both McCain and Obama would do well to bone up on economics and read Roosevelt's speech. We certainly can’t afford to stay the course on this one. Let's all pray that we come through this storm safe, sound, and SOON!

The speech he SHOULD'VE made

My friends, my speech writers prepared a script for me which my advisors and party big wigs vetted and convention officials have posted on these handy teleprompters. But my friends, this is not a time for safe, party-approved rhetoric, this is a time for straight talk.

“You all know, I’ve been called a maverick, someone who marches to the beat of his own drum,” but let’s face it, I’ve agreed with President Bush far more than I’ve disagreed.

If I truly put country before party, I’d have asked someone like my fellow Vietnam veteran Chuck Hagel, Republican Senator from Nebraska. Chuck and I disagree on Iraq and on torture, and he’d genuinely be willing to tell me the what he thinks and stand up to our party and special interests. But I’m more interested in my own personal legacy than in actually advancing real reforms.

I really wanted to pick my friend Joe Lieberman, the Independent Senator from Connecticut. I like him, we agree on things and get along well, so I know he’d be a good working partner. But after all, he used to be a member of the Democrat party, among other things.

I thought for sure that Governor Frist of Florida or Tom Ridge of Pennsylvania. Both could garner a few more electoral votes than Nebraska, Alaska or Connecticut. But lets face it, Karl Rove, Newt Gingrich, GOPAC and Republican strategists decided to stick me with this former local TV Anchorwoman and beauty pageant runner up.

You gotta admit, it was a stroke of genius. Should Liberals attack her, we'll get to cry "sexist" and make them look like a bunch of hypocrites. Even though we’ve opposed equal rights for women and equal pay for equal work, if we win, we’ll get to lay claim to breaking that glass ceiling for women, not those pesky Democrats.

Sure, for years, Republicans have argued that women should stay home with their kids instead of pursuing a high profile career, but it’s the Democrats who’ll look sexist or even “elitist” if they question her for putting her five kids through a national campaign.

It’s a win-win. She advocated abstinence-only sex education and cut funding for programs offering shelter to homeless unwed mothers, but she and her pregnant 17 year old daughter are heroes for not having abortions.

Sure, she may have improperly pressured then-Public Safety Commissioner to fire her ex-brother-in-law, an Alaskan state trooper, who had been in the middle of a custody dispute with her sister- but that just shows that she can stand up to men and she gets things done. It doesn’t mean she won’t help me fight corruption and reform government. Maybe I’ll put her in charge of hiring and firing U.S. Attorneys, so that the Attorney General won’t have to be bothered.

Let me be straight with you my friends, if elected I probably wouldn’t be so bad. I’d probably be much less of an extremist than George Bush. My advisors are just trying to activate our party’s base of extreme right wingers so that they’ll get out the vote. Once I’m elected, I’ll probably be more like an H.W. Bush or maybe even a lovable dottering grandpa type like Reagan- everyone loves Reagan.

So you won’t even have to worry about “Caribou Barbie” unless I die or am incapacitated somehow while in office.

My friends, what we really need to worry about is insuring the old Reagan ideals of trickle-down economics, less regulation of corporations and massive tax cuts for the extremely rich. We can’t let these dreams die.

Sure, more Americans are out of work than have been at any time in the last five years, but remember, a rising tide lifts all boats. If the levy breaks, then it raised cars and houses too. I want to protect middle-class Americans like my wife Cindy and myself. If the Democrats win, people like us may have to cut back to only four or five houses instead of seven or eight!

And let’s not be confused: These are perilous times, not just for America, but for freedom itself. Freedom to own and carry your own 39mm Kalashnikov automatic assault rifle. Freedom for importers, and food and drug producers from burdensome government oversight. Freedom for hedge fund managers, banks, mortgage lenders, credit card companies and financial speculators from oppressive government regulations.

Most of all it’s going to take someone of unusual strength and character, to continue to wage the world wide war on the Constitution and the Bill of Rights.

My friends, only I have the experience it will take to keep on torturing people, to racially profile and to harass elderly women at airport security checks.

The only way you can be safe is if you continue to let this government have the freedom to spy on it’s own citizens, and investigate and compile private data on them. If you don’t vote for Sarah Palin and me this November, the enemies of these freedoms will win.

And that’s not just empty rhetoric, that’s change you CAN believe in.

Senile, Sneaky, or a little of both?

It's not that he'd be Bush III, it's that he'd be Reagan II; Either McCain is an evil genius or a doddering old codger. Haven't we been down that road before? Yeah, say back in the eighties...

I got to meet John McCain once, it was when he first ran for the Senate in 1986. He gave a press conference at the offices of the Arizona Republic and Phoenix Gazette. He seemed a little stiff and stand-off-ish, but not nearly as smug as Jon Kyle who was running to replace him as one of Arizona’s Congressmen.

I liked that McCain was willing to buck his party for the sake of what he believed was in the best interest of the country. I considered myself a fiscal conservative and was mad as heck at the Reagan administration for letting the federal deficit and the national debt run amok. McCain was a principle supporter of the Gramm-Rudman Act, which was supposed to automatically cut spending in the event of a budget deficit.

But most of politics is smoke and mirrors. One of the authors of Gramm-Rudman, was Texas Republican Phil Gramm.

Gramm had been McCain’s senior economic adviser. He isn’t anymore. You may remember a few weeks ago that he tried to tell people that we aren’t in a recession. "You've heard of mental depression;” he said, “this is a mental recession.” Gramm said that “we have sort of become a nation of whiners, you just hear this constant whining.”

I don’t know about you, but not only do I whine every time I fill up at a gas station, but if the price of oil doesn’t drop soon, I plan to whine a lot when it’s time to fill up the home heating fuel barrel. Coincidently, Gramm was being paid by Swiss bank, UBS to lobby Congress about the U.S. mortgage crisis. McCain has been proudly campaigning on how he won’t be influenced by lobbyists.

What with the Housing crisis going on and failure and looming bail outs of Bear Stearns, Fannie Mae, and Freddie Mac, I think it’s important to have a President who’s comfortable making decisions about the economy. McCain has admitted that “economics is not something I’ve understood as well as I should”

But he has plenty of experience in dealing with issues of banking and predatory loans. Remember he was a member of the so-called "Keating Five.” Between 1982 and 1987, McCain accepted $112,000 in political contributions from Charles Keating Jr. and friends at the Lincoln Savings and Loan Association, along with trips on Keating's jets.

But I’m more concerned with McCain’s performance in the areas of history and geography.
Just last week in an interview with Katie Couric on CBS, McCain boasted that President Bush’s “surge” in Iraq made a movement possible called the Anbar Awakening,” in which Sunni tribes united to resist Al Qaida. The problem is that the Anbar Awakening happened in 2006, whereas the American surge took place in 2007. I can’t help but remind you that Al Qaida wasn’t ever in Iraq until AFTER the United States invaded, because Saddam Hussein hated them, as do most Iraqis. Also keep in mind that it was Al Qaida who attacked us in 2001, not Iraq.

Also, has anyone told McCain that there is no Chezkslovakia anymore? How about that Iraq and Pakistan don't share a border?

At least McCain’s friends, Connecticut Senator Joe Leiberman had the decency to explain to him that Iran was training Hamas members, not Al Queda members.

Obama has utilized the internet not only to bring in millions of small dollar donors instead of relying on the conventional hand full of multi-thousand dollar donors that politicians used to, but also to establish a vast ground-roots movement, especially vitalized by young voters. On the other hand, 72 year old McCain doesn’t do the internet. I appreciate that not many 72 year old would feel the need to establish their own Facebook accounts, but too much information, education, communication and commerce take place on the web for any future President to be able to afford to be technologically illiterate.

He thinks that the media has been giving too much attention to Obama, but come on, if Barrack Obama had made the same kind of gaffes that McCain has been making- especially in say a two or three week period, wouldn't the media have eaten him alive?

There was a time when I had patience for, even a level of comfort with McCain, but I just can't seem to take him seriously anymore.

And here's another thing- (and please forgive me for using these ugly words, it's just to make a point) if it's wrong for Jesse Jackson to use the word "nigger," why is it okay for McCain to use the word "Gook?" Isn't it insanely racist against Asians?

America, this is our moment

Hillary Clinton made history by coming so close to winning the Democratic nomination on June 3.

Barack Obama graciously called her “a leader who inspires millions of Americans with her strength, her courage, and her commitment to the causes that brought us here tonight.”

More history was made that night. Only two sitting Senators have ever been elected President, Warren G. Harding, and John F. Kennedy. No matter who wins in November, they will be the third. Arizona Senator John McCain (age 71) is the oldest man to ever run for President.

I believe that history was made Tuesday, June 3, not because a Black man had accumulated enough delegates to win a party nomination, but when Sen. Obama told us that “Our time to turn the page on the policies of the past. Our time to bring new energy and new ideas to the challenges we face. Our time to offer a new direction for the country we love.”

McCain’s speech that night was about Barack Obama, about how McCain doesn’t think Obama is qualified to be President and that his rhetoric about hope and change is just rhetoric. Hillary Clinton’s speech that night was about herself and how many people voted for her and how she deserves power. Obama’s speech wasn’t about a Black man making history, it wasn’t about himself or his rivals (except to praise them). His speech was about providing jobs, making taxes fair for the middle and working classes, making college and health care more affordable and restoring our reputation in the world.

Hillary supporters need to pull together behind the Democrat’s new nominee. Democrats will only hurt their chances in the Fall if they continue to campaign using fear, innuendo, and division. Those were the tactics of the Bush administration. Obama showed what he was made of when he stuck to the high road.

"What you won’t hear from this campaign or this party,” he told the crowd in St. Paul that Tuesday night, “is the kind of politics that uses religion as a wedge, and patriotism as a bludgeon – that sees our opponents not as competitors to challenge, but enemies to demonize."

Frankly, I think that’s been a problem afflicting our nation since the days of Joseph Mccarthy.

Religion should be a tie that binds, not a tool for political leverage. So-called conservative Christianity is neither genuinely conservative or at all Christ-like. It’s radical and legalistic, like the Pharisees who were constantly trying to trap Jesus in the Bible.

The Right-wing religion introduced into the public square by the likes of Jerry Falwell back in the 1980’s is about fear, anger, and a need to control culture. It’s about prohibiting and preventing. It’s against a lot of things- but what is it for? It opposes things but what does it propose? Does it propose we feed the hungry? Refresh the thirsty? Invite in the stranger? Clothe the needy? Visit the sick and imprisoned? What would Jesus do?

TRUE patriotism is standing up for the principals embodied in the Declaration, the Constitution and the Bill of Rights- not just the flag or the pledge or a car magnet shaped like a ribbon. It's not a lapel pin.

Choose hope over fear? Yes we can.

I hope that Hillary supporters will unite with Obama supporters to truly change the direction of the Democratic party. So that it will be bottom-up and not top-down. So that it won’t be politics as usual. Millions of small donors on the internet instead of millions from corporate donors and special interest groups and lobbyists.

I also hope that Republicans who are sincere in their concern for traditional values, for families and for honest people who work hard for a living will find something about Senator Obama that they can agree with and be leery of the faux-maverick promises of John McCain.

We all need to be able to argue and debate and hash out solutions together to our problems without calling each other names or writing each other off as irrelevant or morally inferior. It really is time for some serious change.

Let’s come together “to remake this great nation so that it may always reflect our very best selves and our highest ideals."

Mired in mud, war wages on

“Tsuanmi Tuesday” is coming up next week so, here’s my take on what I’m calling “the Malevolent Seven,” the men and woman who would be President. In the interest of making it arbitrary, thereby giving the false impression of impartiality, let’s do it in reverse alphabetical order.

Former Massachusetts Governor, Mitt “perfect hair” Romney (R) has still got the money and the machinery. How will he do on Tuesday? Hard to say, he’ll probably do great in the big states where he’s run ad after ad on TV. He’s taken a lot of flack for being a flip-flopper.

But as appealing as his Reaganesque hair is, I think his biggest drawback will be his biggest strengths. He’s smooth, he’s good looking, and he has a captivating style. Just what any candidate needs right? But he’s too smooth, too good looking, and too stylish. Voters are gonna think he’s a phoney-McFake-pants and avoid him the way you avoid plastic people who are too perfect to be real, which is sad because they might be nice people, but they try too hard.

I am frankly, frightened for Illinois Senator Barrack Obama (D). He genuinely wants to heal our country and be a bridge-repairing consensus builder who reaches across party lines, racial lines, and probably even socio-economic levels. Nobody wants that. Get real. People hate a goody-goody. We like being angry at each other, calling each other names, and blaming each other for our problems.

How could he actually think he could get anywhere with a message of hope and reconciliation? If Bill and Hillary don’t take care of him, the Republicans will find a way to “swift-boat” him. And if he makes it though both of those onslaughts, I’m afraid that the majority of Americans are only pretending to be ready to elect a woman or a Black man. We’re still way more tribal than we want to admit to ourselves.

When you really get down to it, Arizona Senator John McCain (R) is about as old-school Republican as you get, but Republicans don’t think so. See, he proposed the McCain-Feingold Campaign Finance Reform Bill years ago. Yeah, at one time he actually wanted to clean up politics. He’s also come out and publicly said that he’s opposed to torture- which makes sense, seeing as he was once a victim of it.

Be that as it may, he’s said that he’s willing to keep our troops in Iraq for a hundred years if that’s what it takes to win. I guess he forgot that we already won, several years ago. We deposed Saddam Hussein, defeated the Iraqi army and removed the Bathist Party from power. Since then, we’ve pretty much been hanging out, building the world’s largest air base and the world’s largest embassy, and ticking people off.

Then there’s Arkansas Governor Rev. Mike Huckabee (R). Ya want so much to like him because he’s nice and likeable and best friends with Chuck Norris, but there’s just something about him that makes you wonder if he’s not playing that guitar with a few strings missing, no pick, and his amp unplugged.

I’m not talking about the violent criminal activity of his sons, or the fact that he thinks that Pakistan is in Latin America. Even those of us who are on the same page with him on his Evangelical Christian faith and values need to step back and think twice before rushing to amend the Constitution. Of course, he also want so get rid of the IRS- who isn’t for that? Except, funny thing about government services is that they need revenues to pay for them. Even the most radical libertarian likes having an army protect us and appreciates things like roads, bridges, the Center for Disease Control…

How did former New York City Mayor Rudy Guliani (R) do in the Florida primary? When I wrote this a week ago, I could not imagine that his candidacy was going to last too much longer. But who knows? I have a friend who actually thinks that both of the nominations won’t get decided until the conventions this summer.

I feel bad for former South Carolina Senator John Edwards (D), because no one’s really listened to him since the Iowa Caucus. Ah, but not only does he have even better hair than Mitt Romney, but he also has a lot of delegates. He may just end up being the Democratic “King-maker” (or Queen maker, as the case may be). Eventually at least two people are going to start paying attention to him.

Finally there’s New York Senator and former First Lady, Hillary Clinton (D). If a Republican gets elected in November, I won’t blame any third-party candidates, I’ll blame the dirty campaigning and lying that she and her husband Bill were doing back in January.