Republican Slight of Hand

Hello Papamoka Readers! The news lately has been filled with both Republicans and Democrats screaming bloody murder over the completely unjust bonuses being paid by AIG. I agree there have been lots of mistakes made and that everything should be done to stop those payments, however, I also believe the right wing is driving the scandal to distract from the more important reforms.

Republicans haven't had a lot to crow about lately, so they're thrilled the Democrats dropped the ball involving something as controversial as bonus payouts to failing Wall Street bankers. Sure, AIG under the Obama Administration should have seen this coming, but it's still a GOP distraction.

The GOP operatives pushing this scandal are only interested in political gain. It's a scandal within a scandal. They are conveniently ignoring the fact that Bush and Paulson paid the first installment without any congressional involvement and without excluding bonuses the same way, because they too were afraid of employee lawsuits. Subsequent Capitol Hill and Treasury negotiators were also concerned about employee lawsuits. They were worried about increasing liabilities, something lawmakers care a lot about these days. They all had bigger fish to fry.

That's at the heart of the matter, yet nobody seems to have the balls to talk about it. It's all about politics now, and the Republican spin machine is doing its best to strum the last Democratic nerve. The only thing the Republicans are concerned about is a "gotcha" moment, and the Democrats on Capitol Hill are falling for it all hook, line and sinker. Only President Obama has had the nerve to take responsibility while asking us to focus on the big picture. I agree with him. Let's do it!

The AIG Financial Products Corporation, which is now being dismantled by government appointed executives, is the real scandal. The bonuses are horrible, but the real story is why the financial products division of AIG ever came into existence. Let's not forget the regulatory changes led by Senator Phil Gramm of Texas, Newt Gingrich, and the rest of the Republican Congress during the waning days of the Clinton Administration started this national nightmare. They know it, but for some reason rank and file Republicans ignore it, and average Americans never talk about it.

Sure, Clinton signed it under extreme pressure, and he was wrong to do it, but the real culprits were the Republicans who destroyed the walls that stood between banks, speculative investment brokerage firms, insurance companies, and the rest. Those protections were put in place after things went horribly wrong during the last Republican depression. They were designed to manage greed, PROTECT the free market from its darker side, and in the end keep the wolves out of the hen house. It was the REPUBLICANS WHO DESTROYED IT!

Of course, their deregulation was made worse by the fact that regulators were undermined by the Bush Administration. Oversight was weak at best. The Bush Administration was without a doubt a REACTIVE regulator. They didn't believe in the protections. They didn't do their job. I don't care what my right wing readers say, the Bush Administration could have done more to prevent the crisis. They had the data, they knew about AIG and the $50 TRILLION plus DERIVATIVES market, and they knew about the risk to the whole economy. They did NOTHING! They were at least negligent, and at worst conspiratorial.

My dinner party debates always feature a Republican blaming Congressman Barney Frank, Senator Christopher Dodd, and the usual Democrats for not reigning in Freddie Mac and Fannie Mae. What they never admit is how the Bush Administration had the authority, through dozens of regulatory agencies, to reign in the risk across the board. Many economists feel that most administrations would have done so. It was the Bush Administration, along with the Republican belief in small and unobtrusive government, that failed the American people.

Therefore, let's be angry about the greed on Wall Street, but I think it's more important to keep our eyes on the prize. Let's make sure the Democrats and the Obama Administration do everything necessary to reverse the regulatory changes that allowed the Bush Administration to look the other way. Let's FORCE future Republicans to regulate the risk by creating strong and principled new laws.

Let's reform until we can't reform any more. AIG is the critical patient that needs to be isolated and treated, but it's the Republicans and their broken philosophies about government and the market that represent the deadly contagion. Let's find a vaccine and a cure! Let's make sure we never become victims of their greed and stupidity again.

Michael Boh
Papamoka's Left Coast Contributor
from Our Rants & Raves Blog

Presidential Election and Financial Crisis

I’m of the strong opinion that in order to understand the problem that our nation is facing financially you would need to know all of the facts that caused it. It is wiser to have the facts before you than just present a plan for the sake of saying you have a plan. That is just the wrong way, and a very irresponsible way to do things when your nation is facing financial collapse. There is not a band-aid big enough for this problem facing America! Senator John McCain who is running for President thinks it is as easy as that and it is not.

Anyone that has worked in quality control knows that you just don’t guess on the cause of a systems failure. You wait to get all of the facts, examples, research the probable cause of the failure, investigate all probabilities, and eventually you find the root cause of the failure. CSI (Crime Scene Investigation) is very similar to a very well run quality management system. There are steps that need to be taken before you tell the chicken to stop laying eggs because an egg broke on Wall Street. As any good lawyer will tell you, you don’t ask a question in court when you know what the real answer is. Same thing works for quality control and the same thing needs to be in place before any politician races forward with a quick fix plan such as Senator McCain has done with this nations financial market meltdown.

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Barack Obama did the right thing by not offering a quick fix to this situation till he knows all the facts. Throwing hundreds of billions of dollars if not $1 Trillion dollars at this issue is not the only answer and Obama knows that. Changes in the way our nations financial markets work needs to be looked at very closely and the roll that our government played in this collapse needs to be looked at as well! There is no quick fix and as a Presidential candidate Obama and McCain are not privy to the information that President Bush, Secretary Paulson, and Fed Reserve Chairman Bernake are very well informed of.

When John McCain tells you he knows how to fix this problem and has the experience to back up his words I find serious doubt in his word. When his General Co-Chair campaign manager is Phil Gramm who derailed every opportunity he could to free up Wall Street and the financial markets and stripped the safe guards that Franklyn Roosevelt put in place to prevent another financial collapse. John McCain was right there with Gramm on these votes to suspend regulation of the banking industry so there is some root cause suspect right there.

When you look at what John McCain has said about privatizing Health Care just as he has DONE with BANKING then you see even more root cause for the financial crisis that we all will end up paying for. When you look at the stance that John McCain wanted to privatize Social Security and let it be market driven then you see more root cause to the financial crisis facing America today. Both scenarios point to a future bailout that would dwarf the current one we as American’s will have to pay for.

We all know what a lemon is when we buy it as a car, I think you can spot a lemon in a political candidate when you see one. Just last week John McCain wanted to change our nations Health Care system just like HE CHANGED our nations banking system.

If you know a retiree, then warn them that the checks they receive every month may rise or drop with the market on Wall Street if John McCain is President. Can they afford the gamble that McCain wants to take with all the years they paid into Social Security? Could they afford to live if the same crisis happened to their retirement benefit if it collapsed because Wall Street became greedy and started passing out millions of dollars in bonuses from get rich quick scams. That is exactly what happened in the housing finance markets and those that got paid are sitting fat and happy.

There was a reason why FDR put in the fail safe regulations on the markets and banking industry, it was to protect the people from losing their hard earned money. Their was a reason why John McCain and Phil Gramm removed those protections, there was money to be made by friends.

By all means, you can vote for John McCain for President but you had better learn to say “Paper or plastic” in the job you are going to have to get when you are seventy or eighty years old. Enjoy your golden years but get a job you free loaders that should have a secured retirement benefit from Social Security!

Papamoka

*****Reuters has picked up this entire post! Thank You