Bailout Nation

I give MoveOn.org this much. When it comes to their friends they never let the facts get in the way of a good story.

This weeks's meme is the man who will humble corporate control of government is Connecticut Senate candidate and Nancy Pelosi lackey Chris Murphy

One year ago today, the Supreme Court gave corporations the same First Amendment rights as you and me, in the Citizens United decision. And in the last election, we saw what this corporate takeover of our democracy looks like, with a record-setting $4 billion spent on the elections.1

Connecticut Rep. Chris Murphy has been a leader in the fight to rein in corporate control of our democracy. He was one of the first signers of our Fight Washington Corruption pledge, which included a call to overturn Citizens United, and he organized other congressional candidates to join him and "take back our democracy from the big corporate special interests who have so dominated our political decision making in the last decade."2

A corporate front group targeted Rep. Murphy with over a million dollars in attack ads in retaliation for his bold stand3, but Rep. Murphy fought hard, and with help from local MoveOn members, won in November.

Yesterday, Rep. Murphy announced his candidacy for the U.S. Senate seat currently held by Joe Lieberman. It's exciting that as a champion in fighting corporate influence in Washington, Chris Murphy can make this a real issue in the race for Senate.

Will you call Rep. Murphy to thank him for his leadership on this issue? Then, ask him to make sure the issue of corporate influence remains front and center in the Senate race over the next two years by encouraging all the candidates to speak out forcefully on the need to rid our political system of corporate influence.

Now, the rest of the story about Chris Murphy and the corporate buyout of the federal treasury.

MoveOn doesn't tell folks Chris Murphy received well over $2 million from special interest PACs  

MoveOn doesn;t tell people Chris Murphy has raised over $1 million from the financial services industry. Which comes as little surprise as Murphy served on the House Banking Committee when it approved the 2008 TARP bailout.   Indeed, Murphy voted for the $700 Billion TARP bailout withing hours of receiving a large contribution from the American Bankers Association.

So, when did Murphy decide it was time to start fighting corporate influence in Washington? Oh. maybe it was during the health care reform fight....umm...no since the Pharma lobby ran a blitz of issue ads praising Murphy.   Did those ads explain Murphy's flip-flop on allowing drug reimportation? Hey, decide for yourself.

No, Chris Murphy suddenly decided corporate money in politics was a bad thing when the corporations that didn't like health care reform paid for ads against him. The contributions from special interests to stuff his 7 figure warchest and the slick issue ads promoting his agenda, well, then it was good government. 

Incumbent politicians don't like Citizens United for the same reason Microsoft doesn't like Macs. When you have a monopoly you want to stifle the means of competition. You want the people whose industries are at risk to come to you on bended knee, checkbook in hand. How dare these people complain directly to the public!  

You see, it's all about protecting your investment. And MoveOn has invested a lot in Chris Murphy.  He was their Number one recipient of campaign cash in 2006. So when a group like AAF  opposed to big government runs the same type of ad MoveOn ran, take MoveOn's umbrage with a grain of salt. And also understand why MoveOn looks the other way when their boy Murphy ladels out trillions to bankers and drug companies. They are going to stand by their man.  Getting him into the Senate will pay a return on their investment.

And this investment may suddenly go sour if the new darling of the hard left, Keith Olbermann  is persuaded to run for the open Connecticut Senate seat.  How could the unctuous Murphy and his corporate liberalism compete with the 200 decibel leftism of Olby? 

The problem with investing millions of dollars in a product is after awhile, a newer brand goes on the market. MoveOn and Murphy may find their base of support has moved on to a guy who only took millions from Corporate America to call conservatives the worst people in the world. Heh   

Awhile ago I suggested it was time to focus on some high value targets for 2010 in the wake of the Scott Brown victory. 

Barney Frank comes immediately to mind.  He's vocal. He's liberal to the core. And he was wrapped around the failed financial regulatory agenda of the past decade that led to the collapse of the housing industry and the financial markets.

Really, If the public is outraged over Bailout Nation, it would seem they would have little use for the guy whose lax lending agenda created the necessity for bailouts and then was the architect of the bailouts themselves.

Frank's gerrymandered district was until January 19, 2010, thought of as a Democratic stronghold. Then something funny happened. It was carried by Scott Brown.

I also note Frank doesn;t seem prepared for a serious challenge as he only has $400K COH, an advantage one good moneybomb could quickly erase.

So the elements are there for a really hot fire. The problem here is upon review of the Brown performance, it was strongly due to an outstanding showing in a blue collar region 50 miles from Frank's home base. This should be an opportunity. But unless conservative or Republican activists jump in here and make something happen it will be a wasted opportunity.   

 The two candidates thinking now about challenging Frank are perennial candidate Earl Sholley and newbie Keith Messina.  

Neither's gonna get it done.

Sholley's tried before with dismal results. He got 24% in 2008, running behind John McCain even in his own hometown.  Morevover his persona--born in PA 60 years ago; owner of a horticulture business in a small suburb; known for lots of lawsuits--doesn't suggest he has a big upside in an ethnic Democratic district.  No matter how  revved the Tea partiers get over him; there's not enough of them to win here.

Messina lacks controversy, but his website offers little sense he's tied in enough to this district to unseat a 30 year incumbent.

We need a new candidate here

Someone who can exploit Frank's deficiencies and force him to play defense. Someone with sufficient roots here to "look" the part of an effective representative.

Here's where geography and ethnicity kicks in and we turn the gerrymandering of the 4th District against Barney Frank.

Frank's base is in the close-in, high-income towns next to Boston--Brookline and Newton.  Some of MA's wealthiest and best educated people live here and they would never dare vote for any rebellious Republican. In the Brown-Coakley election these town cast about 55,000 votes with about a 22,000 vote edge for Coakley 

On the other end of the district is the less affluent "South Coast" region around Fall River and New Bedford. The towns adjoining those two cities cast about 63,000 votes and Coakley barely carried the region, based on a 3,000 edge out of New Bedford.   Brown ran well ahead of Mitt Romney is this region, suggesting this area is swinging against the Democrats this cycle. While this area was once America's center of whaling,  it doesn't seem Republican candidates are playing the role of Captain Ahab anymore.

The remainder of the district was strongly pro-Brown, as he broke even in Wellesley, lost narrowly in heavily Jewish Sharon, and crushed Coakley elsewhere in Norfolk, Bristol and Plymouth counties, with margins of 2,500 in Taunton, 3,000 in Mansfield, and 2,500 in Foxborough.    

So, we need to find a candidate who can play well on the South Coast.  This is a region that is unique. The largest ethnic group here are Portuguese Americans.  Providence TV covers these communities. And New Bedford and Fall River have their own daily newspapers and radio stations.

And this region and its major ethnic group are forgotten in MA politics. I can find no evidence of a Portuguese American ever winning a MA congressional election. And the last resident of Bristol County to hold a House seat was North Attleboro's Joe Martin who left office in the 1960's.    MA pols tried to address this in a failed 2002 remap to draw a new House district; but it would have caused an existing seat in the Merrimack Valley to disappear and the plan failed.

Back in 1982 a much younger Barney Frank campaigned hard when this region was added to the district and won their votes.  Can an entrenched incumbent explain that 28 years later this area is still economically troubled--and it's not his fault?  Can a an urban social liberal bring back ethnic blue collar voters to the Democratic line?

Can he do this if we run a young, appealing Portuguese American lawyer or businessman from the South Coast against him?

I know "what" the candidate here would look and sound like. I admit. I don't have a name.

That's where the MA GOP and the conservative activists need to step up. We need to find this person.  

I'm reasonably convinced that if we find my South Coast candidate Frank's numbers in the region will be held down sufficiently that we will have a reasonable shot of victory. (While Martha Coakley did many things wrong, leaving votes on the table in Brookline and Newton wasn't her problem; she pretty much topped out for a Democrat in a contested race there.) 

We will need to fund our target candidate  of course, and find a way to bypass Sholley and Messina. So inertia is not an option.   

And I'm not saying it's going to be easy. But Frank--due to his high profile, his atrophied campaign apparatus, and his acerbic persona--is going to be worth it.  

The question is: do we just want to kvetch about how Barney Frank burned down our financial house or do we want to do something productive to hold him accountable for his debacle.

I'm for getting to work. Anyone got a list of lawyers in Fall River for me to vet? 

It's sorta common knowledge that our President, a native of urban Chicago, is not a fan of the SUV.

One prominent auto magazine had this take on his mandate to massively increase the fuel economy of the American motor fleet.

Obama's CAFE Fuel Economy Standards to Create Fleet of Tiny, Expensive Vehicles - Car News

But we "know" "everyone loves the environment" and "everyone hates SUVs". So the car buying public is reacting positively to how the auto industry is being changed?

Maybe not..

If you've got your eye on a new SUV, don't blink.

It might be gone. Even with the auto industry mired in depression – sales are down nationally 36.5 percent – big vehicles such as the Ford Expedition and Chevy Tahoe are in tight supply because of drastic production cuts that automakers imposed last year as sales began to plummet.

Now, a year after $4-a-gallon gas nearly killed SUVs, some dealers in this market are selling them for window-sticker prices. Moreover, most late-model used pickups and SUVs have regained all of the thousands of dollars in trade-in value they lost last summer, dealers say.

O.K. , this is Texas, the biggest , reddest and right now most prosperous part of the country. But don't think this is likely to be an aberration. And it is going to be a big problem in trying to recover much of our $100 Billion or so investment in Detroit.

The competitors to GM and Chrysler have to follow CAFE too, but are under less intense pressure to be "green". Look for Ford and Toyota to maximise production of Explorers and Highlanders if GM and Chrysler are pressured to hold down production. And look for SUV prices and profits to rise further due to regulatory scarcity.

One huge problem Obama Motors has is the market share for domestic brands are disproportionately based in Red States, in rural/exurban areas, and among older and non college educated drivers.  Yep, people who mostly voted for John McCain. 

The Obama brain trust will force the two government owned car manufacturers to develop a product line that appeals to young urban sophisticates. ---not the traditional market of "apple pie and Chevrolet". Few of these folks are going to be pried loose from buying foreign brand automobiles. They've just become too accustomed to doing this.   Sounds like Ford is going to gain lots of market share as the last "real American car company" if it can avoid running out of cash.  

I'm certainly not arguing that the previous management of Detroit were a bunch of wise men. But Detroit made SUV's because they were profitable. The Chevy Volt will not be. So the new crew running the car business might lose even more money than the old crew did.

And make the SUV back into a huge status symbol due to its scarcity. 

In his FNS interview today, Mitt Romney mentioned his NYT Op-ed from late last year:

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

While it never should have come to this, it's refreshing to hear Republicans talking about letting losers fail.  Between Romney and Dick Cheney, it's almost looking like we can get the GOP away from Bailouts.  To Paraphrase Rick Santelli, Governor Palin are you listening?!?

In this interview with Larry Kudlow yesterday, Dick Cheney said about TARP:

KUDLOW: But did you anticipate the degree of government control over the banks? No question throwing a safety net from Federal Reserve liquidity was appropriate. I don’t think any economist left or right disagrees with that. On the other hand, what we’ve seen now is that this Congress has moved in to declare, for example, compensation and pay limits, repurchase agreements, dividend policies, merger and acquisition policies. You yourself know these things because you were a CEO of a big company once upon a time. Did you anticipate how Congress would move in to take control of the banks when you made these initial loans?CHENEY: No, I don’t believe we did. I don’t recall any debate within the administration. There may have been some over at Treasury or someplace that focused on the extent of which government would try to control these institutions once they provided financing for them. You know, I’ve got experiences going back to the wage price controls in the Nixon administration where, in effect, we had what I think was a terrible mistake, in that case a Republican administration, where moved in and tried to control the wages, prices and profits of every enterprise in America. It was a huge mistake. We finally got out of it, but it took a long time to do it, and it does a lot of damage.

If you liked that, just wait, it gets better:

CHENEY: Well, some of us at the time wanted GM to go bankrupt, go to Chapter 11.KUDLOW: Were you in that camp?CHENEY: I was.

Essentially, Cheney is saying that he was against bailout nation and Bush overruled him.  I'm not surprised.  Cheney has always been a much more genuine small-govt. guy than Bush ever was.

That said, maybe Quinn Hillyer was right: Cheney, not Bush, should have been President!!!

I was discussing the recent financial crisis with a friend tonight.  He said: "The Problem with the GOP is that they deregulated until the banks became too big to fail." BULLSHIT!!! Had our political leaders had a pair of brass balls last year, they would have realized letting the banks fail would benefit America.  We could have re-built a solid banking system instead of the politicized BS we have now.

Unfortunately, the Republican President and Treasury Secretary didn't have the courage of their alleged free market convictions.  Thus, we're stuck with a politicized banking system for the next decade.

And some people are trying to say the GOP has moved too far to the right...ha!

Chris Dodd has a new silver bullet to rescue his sinking political career.

He's hot to pass a "credit card reform bill" to "protect consumers"

No doubt this will be more popular than say, sweetheart mortgages or signing off on bonuses to his contributors, or having his wife earn millions from corporate boards.

But why now? After all Dodd's been chairman of the Senate Banking Committee for almost three years and just got around to getting this bill moving....even though he's claimed to have supported reform for two decades?  (Perhaps that's the "lifetime of leadership"...complain over and over again about the same stuff you never fix)

Well, when you spend over 100 days in Iowa your work in Washington does tend to suffer. 

But why is credit card reform now moving through the Senate faster than a speeding bullet?

Because it's just a trojan horse for another bailout.

Tucked deep inside Chris Dodd's "credit card reform bill" is this little nugget.....an increase of up to $500 billion in borrowing authority for the FDIC.

The bill would provide a permanent increase in the FDIC’s authority to borrow from $30 billion to $100 billion and would provide a temporary increase of up to $500 billion under certain conditions"

Think another $500 billion bank bailout would go over too well right now? So, guess what , we'll just make it the "fine print" in the "credit card reform' bill and make anyone who votes "No" out to be "anti-consumer"

How is that any less sleazy than the fine print in credit card statements this bill claims to prevent? Seems like the banks may be prevented from secretly changing your credit limit, but politicians think nothing of doing it themselves. 

Besides, why do we need to give the FDIC more money? Weren't we told last summer that Dodd "didn't expect many more banks to fail" 

We're up to 33 banks already this year, Chris. 

Remember before Christmas when you were told what a piece of dreck the auto bailout was after Chris Dodd got his hands on it...

well, the results are starting to come home to roost

We are now the sole source of capital for Chrysler...who's business plan as blessed by political wheeler-dealer Steven Rattner is going to be as follows:

A struggling Italian automaker will run a company largely owned by the UAW to make new models of fuel efficient cars that will be better than Toyotas and Hondas. All this from the #5 or # 6 auto maker in US passenger car sales (hello, Dodge trucks and Jeeps are what they really have left)

Really, you think the point is not to shut the joint down before MI certifies its 2012 election results?  No matter how much taxpayer cash they burn through?

Or am I too cynical?

Too bad Bob Corker wasn;t calling these shots. But when it comes to Dodd, this is what we ought to expect

The cause 

A big New York Times story this morning strongly suggests that Team Obama is about to up the ante in an effort to control the banking system for as long as the eye can see.White House and Treasury officials are now talking about turning government TARP loans into common stock for the 19 biggest banks. It’s clearly a backdoor path to nationalization, as Uncle Sam would be the largest shareholder in these institutions. What’s more, it’s not at all clear that the administration will even let certain banks pay down their TARP loans.This is government intervention into the private sector on a grand scale. It is financial/industrial policy. Banks will be kept on a very short leash regarding compensation, loans, credit-card issuance, mergers, acquisitions, and all the rest.Not surprisingly, stocks opened down 200 points today — with banks leading the freefall — and finished down about 300 points. 

The effects

   You can check out any time you want...but you can never leave.....   

Dear Senators Dodd and Schumer and Congressman Frank,

First things first, let me congratulate you for reaching a level of hypocritical grandstanding I thought impossible even for the United States' Congress.

Congressman Frank, you blocked oversight at Fannie and Freddie while you were dating a high ranking Fannie official.

Senator Dodd, you took a bribe from Angelo Mozillo to filibuster George W. Bush's attempts to reign in criminal excesses at Fannie and Freddie.

Senator Schumer, the 100% tax rate you propose on Wall Street bonuses violates the ex post facto clause in the United States Constitution.  Not that you care when you're up for re-election this cycle....

Furthermore, all three of you were crucial players in the decision to bailout Wall Street.  While you may personally disagree with some of the decisions those firms have made, the fact remains you had an oppotunity to let said firms fail six months ago.  Instead of letting Wall Street fail; you failed.

Once you decided to bail these firms out, you implicitly accepted responsibility for any unpopular business decisions said firms made.

Against that backdrop, I find your grandstanding over the compensation paid by the American International Group (AIG) utterly nauseating.  Said compensation, while perhaps unwise from a narrowly defined business perspective, is standard practice in the financial services industry.  Gentlemen, if you didn't want AIG engaging in standard business practices; THEN YOU SHOULDN'T HAVE BAILED THEM OUT IN THE FIRST PLACE!!!

Don't get me wrong: AIG screwed up and THEY SHOULD FAIL as a result (the fact that their screw up is a direct result of Elliot Spitzer's bullying is a topic for another day).  That said, Gentlemen, you are standing in the way of AIG's creative destruction.  Until you are willing to let AIG fail, your whines about executive compensation ring hollow.

Sincerely,

Adam Cahn

Austin, TX