Wall Street Deregulated More by Congress, Increasing the Risks of Another Economic Crash

Congress deregulated Wall Street in 1999, and then less than a decade later, the crash of 2008 that lead to the Great Recession happened. There’s a similar story from the deregulation of the 1920s that lead to the 1929 crash and the Great Depression. And big banks already make record profits, and lessening oversight and regulation of them will allow them to push those profits higher at the expense of consumers.

In a strong indication that they are well aware of how politically toxic a vote to reward big banks is in the eyes of the American public, not a single one of the 33 Democrats who voted for the bill—many of whom have received substantial sums of campaign cash from big banks—had the courage to speak in favor of it on the House floor.

By approving the deregulatory measure, which weakens oversight of 25 of the nation’s 38 largest banks, the House cleared the final obstacle on the bill’s path to Trump’s desk. In a tweet early Wednesday, the president applauded the measure’s passage and vowed to sign it into law “shortly.”

“It is reprehensible that our Congress has abdicated this responsibility in a clear move to cater to Wall Street,” Morris Pearl, chair of Patriotic Millionaires, said in a statement on Tuesday. “This is bipartisanship at its worst—members of both parties coming together to bow down to their wealthy donors on Wall Street instead of protecting their constituents. 2008 was just a decade ago, have we already forgotten the lessons we learned?”

Other article:

On Capitol Hill, Congress passed sweeping legislation to exempt thousands of banks from key regulations in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, meaning the vast majority of banks will no longer have to follow the regulations aimed at preventing another financial meltdown. The Dodd-Frank Act was passed after the 2008 economic crisis, which was provoked by years of risky lending by Wall Street banks.

Yet, in a rare bipartisan effort Tuesday, House lawmakers voted 258 to 159 to exempt banks with less than $250 billion in assets from many of these regulations, even though banks’ profits are soaring. A report issued Tuesday from the Federal Deposit Insurance Corporation said the net income of banks and saving institutions hit $56 billion in the first quarter of this year—a 27 percent increase from a year ago. Thirty-three Democrats joined their Republican counterparts in voting for the financial regulation rollback, which, if signed into law, would leave fewer than 10 banks in the U.S. subject to stricter federal oversight.

U.S. Supreme Court Damages Labor Rights by Ruling that Employers Can Legally Prevent Employees from Joining Together in Class Actions

Employers vs. employees — one of the core societal conflicts plays out again, benefiting management over labor as usual. Perhaps the solution is to make the employees the collective employer, so that the workers themselves can democratically decide who is hired and fired and what workplace provisions are applied. In any case though, it’s a serious affront to labor rights, with the law of contracts — a conservative pillar of democracy before modern “conservatism” turned into an ideology trying to justify giving as much money to rich people as possible — being further worsened.

The U.S. Supreme Court on Monday dealt a blow to worker rights, saying that employers can bar their employees from banding together to challenge workplace abuses including wage theft and sexual harassment.

MSNBC host and legal analyst Ari Melber summed up the 5-4 decision (pdf) by tweeting: “Supreme Court rules that you have the right to your day in court, unless a corporation effectively makes you give up that right.”

Political activist Zephyr Teachout, meanwhile, said the decision “is terrible news for workers in America,” as it makes “it harder for employees to get a fair hearing when they are screwed.”

When employers mandate arbitration clauses, employees must act as individuals to challenge alleged workplace abuses, and are thus barred from gaining strength in numbers through class action suits to challenge corporate power. In the cases before the high court, employers had argued they had the right to impose such contracts under the Federal Arbitration Act, while employees argued they had the right to take collective action under the National Labor Relations Act (NLRA).

[…]

Justice Ruth Bader Ginsburg wrote the dissenting opinion, and read a summary of her dissent aloud—”something justices do only rarely to signify their objections,” USA Today reported.

Ginsburg called the decision “egregiously wrong,” and asserted: “Recognizing employees’ right to engage in collective employment litigation and shielding that right from employer blockage are firmly rooted in the NLRA’s design.”

She further noted that made “to face their employers without company, employees ordinarily are no match for the enterprise that hires them. Employees gain strength, however, if they can deal with their employers in numbers. That is the very reason why the NLRA secures against employer interference employees’ right to act in concert for their ‘mutual aid or protection.'”

“The inevitable result of today’s decision ,” she added, “will be the under-enforcement of federal and state statutes designed to advance the well-being of vulnerable workers.”

EPI’s McNicholas urged Congress to take action to prevent that from happening.

“It is essential to both our democracy and a fair economy that workers have the right to engage in collective action,” she stated. “Congress must act to restore this fundamental right and ban mandatory arbitration agreements and class and collective action waivers.”

Last Week Tonight Episode on ‘Long and Infuriatingly Proud History’ of Corporate Tax Cheating

It’s a pretty good video (link) based on its evidence and presentation, and I say that as someone who has spent a fair amount of time studying corporate tax systems.

Comedian John Oliver pulled no punches (well, he pulled a few) during Sunday night’s episode of “Last Week Tonight,” especially in the feature segment in which he eviscerated the U.S. tax system by revealing just how endlessly favorable it is to corporations and the wealthy at the expense of everybody else.

Citing last year’s massive tax giveaway to the rich, which will ultimately raise taxes on tens of millions lower-income families, Oliver says, “We just had a huge chance to reform our tax code and we absolutely blew it.”

As The Week details, Oliver goes on to pillory the ability for corporations to avoid taxes by exploiting loopholes and a worldwide web of tax shelters:

Oliver walked through the “long and infuriatingly proud history” of corporate tax avoidance, with a special nod to Apple and Google for being top “innovators in weaselly accounting,” though GE and other huge companies paid zero federal taxes for much of this century. The new tax bill does force some of those companies to pay taxes on money stashed overseas, but at bargain rates — a gamble that did not pay off in terms of job creation in 2004, and probably won’t this time either, Oliver said.

Deregulating the Banks and Risking Another Economic Disaster

The economic crash that happened around 2008 was truly horrible, as many who lived through it are aware. The negative effects of the crash were felt overall worldwide and included trillions of dollars lost in worker pensions and savings, chronically high unemployment, trillions of dollars worth of lost output, and lots of other residual suffering. There were also woefully inadequate positive changes — there have been insufficient measures to help the vast majority of the population and the criminogenic structure of the too big to fail banking industry is mostly the same as it was in 2007.

All of these considerations about the economic crisis warrant thinking about why it happened in the first place, so that the same foolish mistakes that caused immense human suffering don’t have to be repeated again. Beyond possibly referring to the inevitable instability of the state capitalist economic system, it’s rational enough to look back to 1999, when a large part of the consequential deregulation happened.

In 1999, the U.S. Congress passed the Graham-Leach Act that (among other things) repealed important sections of the 1930s Glass-Steagall Act. Glass-Steagall’s important provision was that it by law set a firewall between depository banking and investment banking. There were unpunished violations of this law by the banks over the decades, but it’s a rational law and it did quite well at its specific purpose, which is to try to prevent the reckless gambling with consumer savings that’s actually still allowed today.

The big story of why the crash happened though is the housing bubble that the big banks and certain other financial corporations (with immoral behavior and using predatory lending practices to consumers) largely created. This housing bubble was evident enough to reasonable economists that don’t serve plutocratic interests, but there are few of those, so only a select few economists spotted the bubble early on.

“We had a 8 to 10 trillion dollar housing bubble over the decade from ’96 to 2006,” said economist Dean Baker, who in 2002 predicted the bubble and the recession it caused. “House prices rose by more than 80 percent by one measure, 100 percent in excess of inflation. Over the prior hundred years — 1895 to 1995 — house prices had just kept even with inflation. This should have been real simple.”

The housing bubble did drive the economy forward through what’s known as the wealth effect, where people (primarily lower- and middle-income people) spend more money — typically 5 to 7 cents on a dollar — if they have a higher net worth. The higher spending (estimated at between 400 to 500 billion dollars a year, about a twentieth of $8 trillion, and about $3000 per 2018 U.S. household) drove more demand and contributed to some economic gains. These gains came with a heavy cost though, and that cost was the bubble popping and causing the worst economic collapse since the Great Depression.

Why the Great Recession was as bad as it was in the U.S. is actually fairly simple. About $8 trillion worth of housing bubble wealth disappeared with the bubble’s pop, and with that went a lot of consumer purchasing power or what’s known as demand. The main problem for the Great Recession being as horrendous as it was is due to there not having been enough demand in the economy, or to use different terms, the vast majority of people were screwed over too hard and weren’t given adequate resources to recover with. Instead, the U.S. government (and some other governments with different measures) acted with urgency to bail out the financial corporations that primarily caused the crash problem.

The story of the big bank bailouts is particularly noteworthy because it was unnecessary. Actually, a strong majority of the U.S. population was opposed to the bailouts, and if the U.S. had a real, functional democracy, that strong majority opposition would have translated into policy. The bank bailouts were unnecessary though because it was known how to keep the financial system operating when the banks failed — this was seen in the S&L crisis of the late 1980s, for example. There were also simply other ways to help most people — the central bank of the U.S. that loaned trillions of dollars at extremely low interest rates to failed banks could have been used for numerous superior purposes, such as providing an investment stimulus that would actually fully compensate for the shortfall of demand. The stimulus enacted by the Obama administration simply wasn’t large enough, and many people suffered for that.

Now today on March 15, 2018, it’s being reported that the U.S. Congress is about to deregulate the banks again. The process of another significant economic recession and expensive public bailout are a real possibility. This is noted as banks such as Morgan Stanley and Citigroup wouldn’t even exist today if they hadn’t been bailed out, and it’s disturbing that the deregulation will allow them increased opportunity to boost profits through extracting money from consumers via fraud.

It’s also noted as the implicit regulation — that there will be a bailout if a big bank fails — also remains in place, and this implicit subsidy (which prompts riskier financial activities) has been estimated by the IMF to cost about $70 billion ($550 per U.S. household) annually. This is yet another drain on the economy through the corrupted financial system, which could be eliminated or reduced through enacting a financial transactions tax, breaking up the big banks, and/or bringing democratizing measures to economic institutions.

In sum, the history of this deregulation and misregulation of the financial sector presents a clear picture of the problems it causes. More people must be aware of this and organize effectively to prevent these same unnecessary mistakes from being made yet again.

Review of the Janus Case That May Severely Damage Public Sector Unions

I see this effort to damage unions as a mechanism to give more money to the richest people in the country. It’s an important Supreme Court case for a variety of reasons though and the column does well to explain it.

Later this year, the United States Supreme Court will decide a lawsuit filed by Mark Janus, a public employee in the State of Illinois. Janus is arguing that he cannot be forced to pay a representation fee to a public sector union as a condition of employment by the state. If the court rules in favor of Janus, as is widely expected, it will be yet another blow against unions, further weakening workers’ power.

Under current law, the federal government gives states the option of allowing “agency shop” provisions in contracts under which everyone who is covered by a union contract. Twenty-four states, including California and New York, allow such contracts.

These contracts make it easier for unions to organize and to be a strong presence in the workplace since they prevent workers from being able to freeload. Without an agency shop provision, workers would be able to get the pay and benefits negotiated by the union, and even the right to have union representation in disputes with management, without having to pay a penny for those union supports.

While most workers support their union and will pay representation fees without being required by a contract, recent experience indicates that between 20 to 30 percent of workers will take the freeloading option. This hugely weakens the union if they lose 20 to 30 percent of their revenue. It is likely to make them a less effective agent for members and will almost certainly result in fewer unions in the public sector.

This is clearly the goal of the groups supporting Janus. He is having his suit funded by right-wing groups that have been attacking unions for decades. The ostensible basis for the suit is that Janus somehow has his right to work compromised if he has to pay representation fees as a condition for holding a public sector job. The argument is that the government can’t force him to support an organization (the union) that he may not like. (It is important to note that he is not forced to join the union, only pay for his representation.)

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In the 1970s, unionization rates in the private sector were over 20 percent. They are now under 7.0 percent. Meanwhile the unionization rate in the public sector has changed little, remaining close to 37.0 percent for most of this period, until the recent attack started pushing it down in the last five or six years.
It is understandable why the right would be targeting unions. Not only are they an important source of funding and a source of campaign workers for Democratic candidates, but they have also been behind efforts to push progressive measures at the state and local level.

With the right effectively blocking most progressive movement at the federal level since the early days of the Obama administration, many state and local governments have moved forward with measures like higher minimum wages, paid family leave and sick days, and even state-managed retirement systems for private sector workers.
In every case where such measures have advanced, unions have played a central role. In some cases, this has meant lobbying legislators to support these measures. In others, proponents were able to pass these measures into law with ballot initiatives in which funding and campaign work by unions were essential.

The right recognizes the importance of unions to progressive change and for this reason wants to do everything it can to weaken them. Unfortunately, many people who consider themselves progressives have not been as understanding of the role that unions have played in promoting change. As a result, they have not always been supportive of measures to facilitate unionization and sometimes push policies, like charter schools, which are a direct attack on public sector unions.

It may be too late to prevent an anti-union ruling in the Janus case, but finding ways to rebuild the labor movement is not just a problem for labor unions. It is a problem for anyone interested in progressive change in the United States. It will be necessary to be as innovative in finding ways to support unions as the right has been in its efforts to destroy them.

NSA Violates Court Order by Deleting Data It Was Supposed to Preserve

The NSA shows once again why it’s such a trustworthy agency.

The National Security Agency destroyed surveillance data it pledged to preserve in connection with pending lawsuits and apparently never took some of the steps it told a federal court it had taken to make sure the information wasn’t destroyed, according to recent court filings.

Word of the NSA’s foul-up is emerging just as Congress has extended for six years the legal authority the agency uses for much of its surveillance work conducted through U.S. internet providers and tech firms. President Donald Trump signed that measure into law Friday.

Since 2007, the NSA has been under court orders to preserve data about certain of its surveillance efforts that came under legal attack following disclosures that President George W. Bush ordered warrantless wiretapping of international communications after the 2001 terrorist attacks on the U.S. In addition, the agency has made a series of representations in court over the years about how it is complying with its duties.

However, the NSA told U.S. District Court Judge Jeffrey White in a filing on Thursday night and another little-noticed submission last year that the agency did not preserve the content of internet communications intercepted between 2001 and 2007 under the program Bush ordered. To make matters worse, backup tapes that might have mitigated the failure were erased in 2009, 2011 and 2016, the NSA said.

U.S. Federal Government Set to Further Expand Mass Surveillance

It’s striking that the same congressional Democrats who verbally denounce the current president as a tyrant then vote to grant the executive branch extremely unjust surveillance authority. U.S. citizens, I encourage you to call the Senate and tell them to vote no on this mass surveillance bill. The Capitol Switchboard number is (202) 804-3305.

With the Senate set to cast its first votes on a bill that reauthorizes and expands the government’s already vast warrantless spying program in a matter of hours, civil libertarians on Tuesday launched a last-ditch effort to rally opposition to the legislation and demand that lawmakers protect Americans’ constitutional right to privacy.

Fight for the Future (FTF), one of many advocacy groups pressuring lawmakers to stop the mass surveillance bill in its tracks, notes that “just 41 senators can stop” the bill from passing.

“In the age of federal misconduct, every member of Congress must move right now to stop the government’s abuse of the internet to monitor everyone; they must safeguard our freedom and the U.S. Constitution,” FTF urged.

The FISA Amendments Reauthorization Act of 2017 (S.139)—passed by the House last week with the revealing but not surprising help of 65 Democrats—would renew Section 702 of FISA, set to expire this Friday.

As The Intercept‘s Glenn Greenwald notes, “numerous Senate Democrats are poised” to join their House colleagues in voting to re-up Section 702, thus violating “the privacy rights of everyone in the United States” and handing President Donald Trump and Attorney General Jeff Sessions sprawling spying powers.

The Senate’s first procedural vote on a cloture motion is expected at 5:30pm ET. If the motion is approved, the path will be clear for the bill to hit the Senate floor.

“Every member of Congress is going to have to decide whether to protect Americans’ privacy, and shield vulnerable communities from unconstitutional targeting, or to leave unconstitutional spying authority in Trump’s—and Jeff Sessions’—hands,” the advocacy group Indivisible notes.