Archive for the regulation Category

The Chamber’s Campaign is For the Senate

Posted in Congress, Democratic Party, Lobbying, Organized Labor, Republican Party, regulation on October 24, 2008 by John Stodder

The U.S. Chamber of Commerce is defying the Democratic tide, perhaps at the business community’s peril, according to The Wall Street Journal’s Kimberly Strassel.  Starting from the assumption that Obama will win the presidency, the chamber

has, for months, been defending the 60-vote wall, fully engaged in nearly every competitive Senate race. It may well spend $40 million this cycle, or double its 2006 effort. In many Senate races, the Chamber is proving the only outside help to underfunded Republicans.

The “60-vote wall” refers to the number of senate votes required to stop a filibuster; in this case, a filibuster against anti-business policies a Democratic supermajority would presumably sponsor.

In Kentucky, the group has blasted Democratic candidate Bruce Lunsford for his antienergy stance. In Minnesota, it is beating on Al Franken for failing to carry workers’ comp coverage for his employees. It has tagged New Hampshire Democrat Jeanne Shaheen as a “taxing machine.” It has praised Oregon Republican Gordon Smith for his work on health care.

It also unveiled the season’s most humorous ad, entitled “Meet Bill.” It features real-life union boss, Bill, caught assaulting a cameraman (“I’m gonna’ take this camera and stick it somewhere you don’t want it!”). It points out that it would be Bill who, under card check, would get to monitor votes in a union drive.

Sen. Charles Schumer (D.-NY) has blasted the chamber’s involvement in these campaigns, claiming the officially non-partisan organization is acting like “a wing of the GOP.” He promises unfriendly legislation in revenge.  But the chamber’s Bill Miller, head of political efforts, isn’t fazed.  He tells Strassel:

“What if we became lambs instead of lions? Would the legislative agenda be less beholden to trial lawyers and labor unions? Maybe this is a shot at K Street, but the lobbying mentality of too many is to go up and be solicitous, and hope to get some crumbs from the table. That is not our deal. Our deal is to be the last line of defense for the business community. And while we always work collaboratively, that’s what we’ll continue to be.”

Whether or not there will be 60 Democrats in the next Senate, you have to figure not all 60 would be liberals.  The party’s growth has mostly been at the expense of moderate Republicans dragged down by their association with the Bush Administration and the social and religious right. There are likely to be many “blue dog” Democrats in the Senate next year whose votes will be available to the business community at some price.

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Quotable: Steve Coll on Credit Default Swaps

Posted in Bush Administration, Mortgage/Housing Crisis, Wall Street, regulation with tags , , , , , on October 11, 2008 by John Stodder

Writing in his blog “Think Tank” on The New Yorker’s website, staff writer Steve Coll talks about the consequences of the “shadow banking system,” and how its frightening lack of transparency contributes to the financial crisis:

If the housing bubble had inflated entirely inside a transparent, well-regulated financial system, its end might have been painful, as the tech bust was, but it probably would not have been unusually consequential. The problem, however, was that the bubble inflated inside both the old regulatory system and, simultaneously, inside a new financing system that grew up during the Bush Administration outside of all government scrutiny.

In the current global panic, unprecedented in fifty years, it is common to say that the madness of crowds has taken over. It is certainly true that we should be fearful of fear itself, since panic has practical economic consequences. Prices, for example, speed down faster than they would otherwise, which then causes more panicked selling by leveraged investors. Fearful consumers sit on their wallets, hurting businesses that might otherwise be healthy, and so on. At the same time, it is wrong to blame crowds for this current panic. In many ways investors are reacting rationally to the fact that critical information about the financial markets–the sort of information that New Deal-originated regulatory architecture was supposed to make routinely transparent–is simply not available.

People don’t generally panic in the sunshine. They panic in the dark. And we are in the dark about what assets and liabilities are truly held in what has been properly labeled the “shadow banking system”–the global aggregation of hedge funds, privately placed debt securities, and the hedging or insurance contracts known as credit default swaps. By some accounts, the value of assets held in this shadow system is as large or larger than then value of the assets held in the formal, regulated banking system. But nobody really knows, as there is no transparent market for many of the securities of concern, and no systematic disclosure of assets and liabilities to government regulators–not here, not in Europe, and not in Asia, either.

Read the whole thing.

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