In the movie Wall Street, Michael Douglas’s character Gordon Gecko summed up the attitude of major U.S. banks quite well: “Greed is good.” And this certainly appears to be true, at least for the banks, because after all, the federal government has made it clear that even after the 2008 financial debacle, where hundreds of billions’ of dollars were poured into the likes of these big guys, no effective new rules have been put into place and no major banker has been held accountable.
The old axiom is true. The more the big banks take irresponsible risks and commit out- right fraud, the more things stay the same, as the regulatory system looks the other way. That is until the banks face major losses and cry for help. Then the federal dollars begin to flow and bailout checks pour out of the federal treasury with the force of a flooding river.
Remember just five years ago? The big banks made off like bandits. J.P. Morgan Chase received $25 billion. Bank of America cashed in for $15 billion. Citigroup was the recipient of $25 billion, while both Goldman Sachs and Morgan Stanley received $10 billion, each. With all this money being handed over by taxpayers, surely the rules of financial solvency and bank accountability would be overhauled. Too many risky investments and not enough money kept in reserve was the cry.
And there were some efforts by congress and legislators to build in more “perceived” safeguards. Dodd-Frank legislation was enacted into law in 2010, but many members of Congress who strongly supported the reforms in this legislation feel it did not do enough. “The bottom line is that Dodd – Frank didn’t end too big to fail,” says Representative Jeb Hensarling, chairman of the House Committee on Financial Services. According to Hensarling, the “Dodd-Frank institutionalized and codified too big to fail.”
Then there were internationally agreed upon rules called Basel III, but such rules assume that there are regulators across the globe that can handle the job of monitoring big banks. There have been many instances were regulators have dropped the ball, or have been intimidated by the very banks they are supposed to regulate. And the rules themselves have proven to be complicated and open to varying interpretations.
Into to fray comes two Senators who seem to be making a good faith effort to both simplify the rules and bypass the incompetency of the regulators. And they seem to be on the right track. Ohio Senator Sherrod Brown, a moderate democrat, and Louisiana Senator David Vitter, a conservative republican, have proposed some systematic reforms with the goal of allowing us to stop worrying about big banks. Their legislation is purported to raise the cushion against bad risk by requiring more reserves, and simplifying the requirements to be followed.
Sherrod Brown (no relation) is a details guy. I had the chance to work with him on a number of election reform proposals when we were both Secretaries of State for our respective states back in the 1980s. David Vitter worked with me on a number of insurance reform proposals when he was in the Louisiana legislature in the 1990s, and I was the state’s insurance commissioner. They come from different philosophical slants, but both agree that big banks have taken advantage of the regulatory system and the taxpayers.
Brown summed up their joint approach in a recent statement where he pointed out “that the more we learn about these bailouts, gifts and advantages that Wall Street gets, the clearer it becomes that one set of rules applies to the largest megabanks and another set of rules to the smaller financial institutions and the rest of the country.” Louisiana banker Presto Kennedy agrees. “The solution demands a political will to break up these greedy and corrupt giants that threaten to engulf our financial system.”
The Brown-Vitter proposal does not go as far as requiring break-ups of giant banks. But the legislation does make an attempt to level the playing field. One way is to limit the discretion of regulators who often have been intimidated by the political influence of the Wall Street giants. The New York Times commented that “in a major way, the Brown – Vitter bill effectively sidesteps the need for reliable regulators. It simply says that all banks would have to set up a buffer for potential losses – called capital in the industry – that is equivalent to 15% of their total assets.”
The Brown-Vitter proposal is not a “solve all” solution. But it will go a long way to inhibiting future major financial crises. It recognizes that the five biggest banks in the U.S. control assets that add up to some 60% of America’s gross national product. This doesn’t reflect the free market or real competition. In fact, there is no present free market in the financial system. When you allow an inefficient government-subsidy scheme like the one we have in place now to protect megabanks that are carrying on large, complex activities, even with Dodd-Frank, the regulatory system will continue to allow unmanageable financial giants that will be deemed “too big to fail.”
We’ve had enough of Wall Street welfare. Right now, risky financial behavior is the norm on Wall Street. Heads they win, tails, the taxpayer looses. The Brown-Vitter proposal may have some slight unintended consequences. But it’s a good start, and it will create a much better balanced marketplace with a much greater likely hood of averting any financial crisis in the future.
Jim Brown
On air: 12noon - 2pm CT Sunday
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Website: http://www.jimbrownusa.com
Email: jb@jimbrownusa.com
Facebook: Become a Friend
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Website: http://www.jimbrownusa.com
Jim Brown's Sunday radio program is syndicated all over the country and all over the universe on the worldwide web. But here's the good news. Jim broadcasts on his flagship station right here at home on WJBO. So it's just natural that he will talk about the LSU Tigers, south Louisiana food, Mardi Gras, The Saints, and all the many other events that makes the Baton Rouge area such a special place to live. If you can't hear the show live, you can listen to a podcast over Jim's website. So be sure to tune in and hear a little "Common Sense."
Friday, April 19, 2013
Will More Terrorism Change The Way We Live?
At the end of the Marathon on Monday, it was not just Boston that came under attack. It was an attack on all of us. American the vulnerable. That, unfortunately, is part of the price we pay to live in an open, democratic country where political extremists can will their warped and sick agenda that, as we saw in Boston, shatters the normalcy of our daily lives.
Twelve years have past since the attacks of 9/11. At a time when America dominated the military might throughout the world, a handful of Saudi Arabians with box cutters seemed to bring us to our knees. America still feels vulnerable, and for good reason. The Boston terrorist attack feels too depressingly familiar. Since 9/11, 380 individuals have been charged with acts of political violence in the U.S.
We have seen an upswing of massacres like Aurora and Sandy Hook, where there seems to be no political agenda, but rather a lashing out by deranged individuals who take out their internal frustrations by killing at schools and movie theaters. Violence has become a tool -- way for warped segments of society to express their overwhelming rage.
America is perceived throughout the rest of the world as a violent place to live, but surprisingly, crime is down across the country. Statistics show a significant downward trend of general violence over the past 10 years. Yet we are witnessing a rise in political violence where the criminal acts are not random, but orchestrated, and often done to send out a political message.
I was a student in the 1960s, during the Vietnam era. The Klu Klux Klan was active in my part of the country, and racial harmony was at a low ebb nationwide. Violent confrontations were a regular occurrence. Vietnam protests produced brutal acts of fury, and a wave of politically charged assassinations -- the Kennedys’, Martin Luther King and others shook us to the core.
For whatever reason, violent protests seemed to wane in the 70s and 80s. Political confrontations were few, and law enforcement agencies undertook major crackdowns on domestic terrorism. There were cold war tensions, but no major conflicts that involved U.S. troop commitments, and there were few protests in the streets.
But then the 90s arrived. Michael Barkun, a Syracuse University political scientist who is the author of several books on the extreme right, points out that the early 1990s saw a significant increase in domestic terrorism. "There seemed to be a rise in paramilitary activity in the early '90s. Then Oklahoma City comes along, and again, there's a very aggressive push by particularly federal but also state law-enforcement agencies to get both intelligence and control over this kind of activity - but the activity doesn't seem to stop."
Then came the federal government’s horrendous fiascoes at Ruby Ridge in 1992 and Waco in 1993. Scores of innocent Americans were killed, and these law enforcement blunders were used as fodder for many of the terrorists' ideological fires. Right wing militant groups lapped up “conspiracy” rhetoric that provided a rallying cry for violence to protect liberty. It was a warped and cynical message but the federal law enforcement stumbles gave these radical groups momentum.
Internationally, the collapse of the Soviet Union in 1989 thawed the cold war, but opened up the door for terrorism to flourish across the Middle East. And when you want to make converts, you need to have a bad guy. The U.S. had propped up unpopular dictators for years and was the natural enemy for the likes of Al-Qaeda and other terrorist groups.
We don’t know yet who caused the Boston Bombings. Initial evidence points to domestic terrorism. But in the meantime, Americans, again, are assessing how we will continue to carry on our way of life. Do we just accept a new American culture were violence has become a legitimate way to protest and voice a misguided anger? I hope not.
The Los Angeles Times editorialized that how we live our daily lives “won't change after Monday's attacks. Initially, citizens will be more circumspect, just as law-enforcement will ramp up surveillance. In time, however, behavior will revert to normal – or at least the new normal of metal detectors, airport searches, the deployment of explosive – sniffing dogs at large gatherings and the placement of ugly of obstructions in front of picturesque public buildings.”
To put these recent tragic events in perspective we note that, statistically, the risk of a terrorist attack is quite small, and casualties are few. And did you notice in the Boston videos that after the bombs exploded, people were running towards the devastation to help out? There is no inherent evil in the vast majority of us.
So to those who hate, who detest and abhor freedom, who let their prejudices overcome reason, and who use fear and violence as a tool for a warped or selfish agenda, just remember -- the good guys way outnumber you. And we always will.
Friday, April 12, 2013
The Worst Criminal Justice System In America!
Is there something special about New Orleans? Of course there is. The city that care forgot is unique in so many ways. I could make a list that would go on for pages about the sui generis way of life that can only be found in the Crescent City. Enumerations of a special way of living that is a combination of laid back Caribbean mixed with creole French and a gumbo of immigrants dating back hundreds of years that have been a part of a distinct ambiance unequaled anywhere else in America.
Begin with Mardi Gras, king cakes, Jazz, marvelous restaurants, parades and festivals year round, the French Quarter, voodoo, crawfish, the Saints, cemeteries above ground, Hollywood south, Congo Square, Bourbon Street, perpetuating artists and writers, and a jolie vie that let’s even the most sober resident and visitor alike join in laissez les bons temps rouler.
Here you find the good life that attracts visitors and new residents from far and wide. But there is a dark side. A malefactor and contamination of the law that seems to be ever growing. New Orleans has, at both the state and federal levels, the worst criminal justice system in America. Second place is not even close.
The city would be a tough place to protect even if there was a level of competence that one would expect from any similar municipality across the country. New Orleans has the dubious distinction of having the highest murder rate per capita of any city in the U.S. and is vying for the top rating in the world. Last year, New Orleans had an incredible 72.8 murders per 100,000, which is ten times higher than the national average. To give comparisons from other cities, New York’s rate is three, Houston is 12.9, Los Angeles is 9.2 and Atlanta is 17.2. So the Crescent City is a tough place to keep law and order. But those who are supposed to keep this law and order exasperate the problem.
The notorious Danzinger Bridge scandals, where a number of New Orleans police officers have been convicted of killing unarmed locals and covering up the crimes just after hurricane Katina, continue to haunt the city as some of the prosecutions have been delayed in federal court. The storm took place almost eight year ago. The adage that justice delayed is justice denied finds little favor in New Orleans.
Just last week, the Times Picayune blared headlines of the city running the worst prison in the nation. The sheriff, who oversees the jail, has come under fire for allowing prisoners to literally run wild. The paper wrote of a city jail that is “an irredeemable, understaffed and underfunded cesspool of intimate violence, rape and suicide, unsanitary conditions and deputy corruption.” Assaults by prisoners are a twice a day occurrence, there is a stabbing on average every 11 days, and a suicide every two months.
Videos were played last week in federal court showing inmates drinking beer, using drugs, shooting heroin, laying down money on dice games, and brandishing a loaded pistol. That’s right. All this while in jail. Another video shows inmates who had snuck out of prison and were frolicking on Bourbon Street. You can’t make this stuff up.
So when justice is spinning out of control, one would expect the feds to come riding in on a white horse to take over, begin an investigation and save the day. A pretty scenario that is only pipedream in New Orleans. Here is what The Morning Advocate, the city’s new daily newspaper, wrote recently. “In the U.S. Attorney’s office in New Orleans, things are spinning out of control like a Shakespearian tragedy pulling more and more people into a spiral of doom.”
The U.S. Attorney, along with several of his assistants, resigned in disgrace, as a federal judge issued a scathing 50 page order alleging criminal misconduct by former prosecutors who the judge said testified “falsely” in his court room. The judge ordered a full investigation to be completed in 30 days, but that was months ago and the Justice Department continues to drag its feet. Some see a whitewash taking place. Morning Advocate columnist Dennis Persica lamented: “The spiral of doom (in the U.S. Attorney’s office) has still not ended…..and the wreckage and devastation left in this legal cyclone is mind-boggling.” So much for thinking the feds would or could clean up the mess. As the Wall Street Journal editorialized recently: “Something is very rotten at the Department of justice.”
Fox News rankled local civic leaders last week by referring to New Orleans as “The Big Sleazy.” Bill O’Reilly elaborated by saying: “It is a corrupt city and always has been. Why can’t it improve? Why doesn’t it get better?”
Good question Bill. But to solve a problem, you first have to recognize that the problem exists. I don’t think, as many say, the city is in denial. It’s more a despair that there is little hope for change. The uniqueness of the American government is the system of checks and balances. The criminal justice system, when working properly, keeps the pulse of equity thought out the government process. And it works pretty well-that is, until there is a meltdown of those who are supposed to defend and protect.
New Orleans is certainly in a meltdown. And many of those charged with enforcing the law have become maleficent, or law breakers themselves. It’s time for the city that care forgot to start caring. It’s time for some house cleaning in the Crescent City. It’s time for a major changing of the guard in The Big Easy.
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