President Barack Obama said today that financial speculation needs to be strongly monitored and regulated.
** OBAMA CALLS FOR NEW FINANCIAL REGULATIONS. Appearing with Treasury Secretary Tim Geithner and National Economic Council director Larry Summers this afternoon in the White House, President Barack Obama called for a new financial regulatory approach in the wake of Wall Street’s near inundation by speculation on unknown and worthless assets.
Here are excerpts from Obama’s speech: Hello, everybody. This afternoon, I met with members of my economic team and some key leaders in Congress to discuss the threats to our financial markets in this new century and how we must transform our regulatory system to meet them.
In recent months, we’ve seen turmoil on Wall Street like we haven’t seen in decades, as major financial institutions have faltered or have been sold off. And we have seen the fallout on Main Street, as the market crisis became a credit crisis, and families struggle to get loans to buy a home or a car, to start a small business or to pay for college.
This financial crisis was not inevitable. It happened when Wall Street wrongly presumed markets would continuously rise, and traded in complex financial products without fully evaluating their risks. Here in Washington, our regulations lagged behind changes in our markets — and too often, regulators failed to use the authority that they had to protect consumers, markets and the economy.
We now know from painful experience that we can no longer sustain 21st century markets with 20th century regulations, and that while free markets are the key to our progress, they do not give us free license to take whatever we can get, however we can get it.
But let me be clear: The choice we face is not between some oppressive government-run economy or a chaotic and unforgiving capitalism. Rather, strong financial markets require clear rules of the road, not to hinder financial institutions, but to protect consumers and investors, and ultimately to keep those financial institutions strong. Not to stifle, but to advance competition, growth and prosperity. And not just to manage crises, but to prevent crises from happening in the first place, by restoring accountability, transparency and trust in our financial markets. These must be the goals of a 21st century regulatory framework that we seek to create. …
First, financial institutions that pose serious risks, systemic risks, to our market should be subject to serious oversight by the government. And here’s why. When the Federal Reserve steps in as a lender of last resort, which it’s had to do repeatedly since this financial crisis began, it’s providing an insurance policy underwritten by the American taxpayer. And taxpayers should be assured that the Fed thoroughly understands the institutions that it is effectively insuring and actively monitoring them to make sure that they’re not taking risks that will cost taxpayers in the long term.
Second, our regulatory system — and each of our major markets — must be strong enough to withstand both system-wide stress and the failure of one or more large institutions. And that means modernizing and streamlining our regulatory structure, and monitoring both the scale and scope of risks that institutions can take.
Third, to rebuild trust in our markets, we must redouble our efforts to promote openness, transparency and plain language throughout our financial system.
Fourth, we need strong and uniform supervision of financial products marketed to investors and consumers. And we should base this oversight not on abstract models created by the institutions themselves, but on actual data on how actual people make financial decisions.
Fifth, we must demand strict accountability, starting at the top. Executives who violate the public trust must be held responsible.
Sixth, we must make sure our system of regulations covers appropriate institutions and markets, and is comprehensive and free of gaps, and prevents those being regulated from cherry-picking among competing regulators.
Finally, we must recognize that the challenges we face are not just American challenges, they are global challenges. So as we work to set high regulatory standards here in the United States, we have to challenge other countries around the world to do the same. That’s how we will stop financial crises from spilling across borders and prevent global crises of the sort that we now face. …
President Barack Obama scored well last night in his first address to a joint session of Congress, technically not a State of the Union address as this is his first year in office.
** SCHWARZENEGGER CREATES NEW POLITICAL ACTION COMMITTEE FOR MAY 19TH CALIFORNIA SPECIAL ELECTION. It’s a follow-on to his California Dream Team PAC called Budget Reform Now. Its purpose? To promote passage of the five initiatives spelled out in yesterday’s edition linked to the final state budget deal.
Ironically, the Schwarzenegger PAC used to be called the California Recovery Team. I mentioned some time back that that might be a more apt name.
Budget Reform Now is comprised of law enforcement, business, and labor groups.
** MORE SETBACKS FOR COLEMAN IN LAST OUTSTANDING U.S. SENATE RACE. Democrat Al Franken’s razor-thin lead over Republican Norm Coleman in that much-recounted Minnesota Senate race is holding up, with Coleman’s lawyers losing out on repeated issues in their court case. Here are the details.
Frank will, as noted before, likely be the 59th Democratic vote in the 100-seat Senate, making it easier for Democrats to stymie a Republican filibuster.
** NEW GALLUP POLL: VIEWS ON BANK TAKEOVERS “FLUID.” OR, WHAT’S IN A NAME? Bank nationalization is a live option now, given the near inundation of the private financial sector in a sea of failed speculation and illiquidity. Not that many mainstream pols want to say they’re for it. Former President Bill Clinton (see yesterday’s item) essentially endorsed it, but wanted to call it something, anything, else. The stock market dragged downward by financial stocks went up yesterday after Federal Reserve Chairman Ben Bernanke said bank takeovers would not be necessary.
Meanwhile, a new Gallup Poll finds majority support for taking over major American banks. But minority support for “nationalizing” them.
Similarly, only a minority favors giving aid to failing banks. That’s because Wall Street and bankers are very unpopular, especially after the first $350 billion tranche from the financial bailout disappeared, as far as can otherwise be made out, down the rabbit hole.
With all eyes on the possibility of increased U.S. government ownership of embattled bank Citibank, and with increased discussion of the need for a government takeover of other major banks, a new USA Today/Gallup poll indicates that Americans’ reactions to these prospects vary significantly, depending on how the process is described to them. A majority of Americans (54%) favor a temporary government “takeover” of major U.S. banks, but a much lower minority (37%) favor a temporary “nationalization” of the banks.
The new poll, conducted Feb. 20-22, used a split-sample technique to gauge the impact of different descriptions of the bank takeover situation. A random half of the sample was asked whether they favored or opposed “the federal government temporarily taking over major U.S. banks in danger of failing in an attempt to stabilize them,” while the other half was asked whether they favored or opposed “the federal government temporarily nationalizing major U.S. banks in danger of failing in an attempt to stabilize them.”
(Separate Gallup questioning shows only 39% favoring “giving aid to U.S. banks and financial companies in danger of failing,” when this idea is included in a list of possible steps the government could take to deal with problems in the economy. Fifty-nine percent oppose it. These results are almost identical to those seen regarding possible “nationalizing” of banks.)
Taken together, these results reflect the power of language when it comes to describing government policies: the words “taking over” are significantly more palatable to the average American than “nationalizing.”
** NEW COLUMN COMING UP … WHITMAN’S SAMPLER: EX-EBAY CEO MIRRORS CRISIS ON THE RIGHT.
** OBAMA TODAY. President Barack Obama has a busy day after delivering a powerful performance last night in what amounts to his first State of the Union address.
The speech, which clocked in at 52 minutes, was not technically a State of the Union address as Obama has been president for only a month. But it had all the other atmospherics and dynamics of one.
Obama focused principally on the economy, with tasteful doses of populism and hope tempered by realism and lowered material expectations in the near term. He noted in passing that he is out to end the war in Iraq “responsibly,” and is about to release a timeline on that which is somewhat slower than his campaign promise and leaves a large residual force in-country. Energy, health care, and education were the other major areas of focus.
Today Obama named former Washington Governor Gary Locke to be the new secretary of commerce. Team O has to be hoping the third time’s the charm, as earlier appointees New Mexico Governor Bill Richardson and New Hampshire Senator Judd Gregg didn’t quite work out. Locke, an Asian-American, is a free trader who has been involved in extensive trade dealings with China.
Louisiana Governor Bobby Jindal did not fare so well delivering the Republican response to President Obama. He was largely panned … on Fox News.
Vice President Joe Biden fanned out to the morning TV shows to talk up Obama’s address last night and cement the impression of great success. He chairs the first meeting of the economic recovery implementation team, while Obama conducts various meetings with senior advisors.
Obama and Biden meet with Democratic congressional leaders in the White House, then Obama meets with Treasury Secretary Tim Geithner on the new regulation program for the financial industry.
Obama then makes a statement about those meetings and his financial regulation ideas.
Tonight, Obama and First Lady MIchelle Obama host Steve Wonder in a performance at the White House.
Wonder will perform in the East Room, and receive the Library of Congress Gershwin Prize, named for the classic American composer George Gershwin.
Wonder’s “Signed, Sealed, Delivered, I’m Yours” was the de facto campaign theme song for Obama.
** FROM THE ARNOLD FILE. Governor Arnold Schwarzenegger is back in California after a whirlwind trip to Washington for the winter meeting of the National Governors Association and meetings at the Obama White House.
He was in Los Angeles yesterday to see his family, having been engaged in marathon negotiation sessions prior to his Washington trip around the finally concluded California budget compromise.
Today he has private meetings and discussions in and around the Capitol, mostly centering on plans to explain the budget deal to Californians and on the economic crisis. He has no scheduled public events.
In other developments, Schwarzenegger will play himself in a cameo appearance in his friend Sylvester Stallone’s new movie, The Expendables. The movie, slated for 2010 release, stars a host of figures from action movie hits and centers on a group of mercenaries going to South America to take down a dictator, only to be betrayed.
Schwarzenegger will film his role, taking less than a day, sometime in the spring in LA.
Former Israeli Prime Minister Bibi Netanyahu is finding it tough going trying to put together a national unity government. The centrist Kadima and liberal Labour parties have turned him down, leaving his conservative Likud looking to Israel’s smaller right-wing parties.
** FAR RIGHT FURY OVER CALIFORNIA TAX HIKES AND OPEN PRIMARY. Bill Bennett told conservative California Republican convention delegates meeting in Sacramento just what they wanted to hear today. In a speech that sounded exactly like what he was saying 20 years ago — aside from substituting Islamic terrorists for Soviet Communists as the big bad — the veteran right-wing pundit and former Reagan era education secretary soothed the audience by telling them that their ideology hadn’t really lost in November. Because John McCain didn’t run as a conservative. Enough of a conservative, that is. And, besides, Barack Obama won big because the education system has brainwashed younger voters.
However, much as they liked being pandered to by Bennett’s old-time religion, California’s far right Republicans are fit to be tied now. After half of their state convention, they’re engaging in a
festival of recriminations over a half dozen of their legislators breaking ranks to pass a big tax increase to help out the strapped state budget, as well as another 15 GOP legislators voting to pass an open primary system in the Golden State. The two moves are viewed as anathema by the far right. …
** CALIFORNIA: THE FAR RIGHT’S RITUAL DANCE ON THE EDGE OF THE CLIFF. Yes, it is Groundhog Day. Again. California governance is poised on the edge of a cliff, for the sixth day in a row one Republican vote shy of passing a budgetary mix of spending cuts, tax increases, borrowing, and various reforms, real and otherwise, to plug the state’s $41-plus billion gap over 18 months. Meanwhile, an increasingly conservative Republican Party in this state Barack Obama carried by 24 points dances about in a ritual purification ceremony, promoting non-existent budget solutions and launching coups against conservative party leaders who prove too pragmatic for the true believers.
Before getting to the unintentionally fascinating Republican politics, a word about the state budget. California has had a chronic budget problem dating back to the relatively short-lived dot-com boom, when it took on unsustainable spending programs and tax cuts, with both parties taking part in the party. Then Governor Gray Davis ended up going along, though he had told me he wouldn’t. The pressure from his own party was very strong.
When Arnold Schwarzenegger was swept into office in the 2003 recall, prompted mainly by Davis’s handling of the state’s electric power crisis early in the decade, the former action superstar promptly cut the car tax, to massive public approval. (Davis made two mistakes, incidentally, in the electric power crisis, which saw brief blackouts and skyrocketing rates in a partially deregulated system. First, in looking to Bill Clinton’s regulators (who didn’t help) and not immediately moving to long-term power contracts as the crisis began — Davis and his advisors shortsightedly didn’t want even a small increase in electric rates — and, later, in not moving very aggressively against merchant power generators manipulating the system.)
This combination of spending increases and tax cuts created a structural budget deficit, routinely papered over with accounting legerdemain and borrowing. The state made some progress, but everything went decidedly south with the advent of what is now the global economic crisis. Unlike the federal government, which can print money and borrow from China, as it did for eight years under George W. Bush, California has to balance its budget every year, or at least do a fairly convincing job of faking it. And unlike the federal government — and all but two other, much smaller states — California has the near unique requirement of a two-thirds vote of both houses of the Legislature to pass a budget or increase a tax. But not to cut a tax.
Enter the Republicans, who are getting more and more conservative as their ranks shrink. …
** AFGHANISTAN: RUSSIA TO THE RESCUE. In a very positive sign for the US effort in Afghanistan, Russian Foreign Minister Sergei Lavrov said that transit of US and NATO non-military supplies through Russia to troops in Afghanistan will begin within days.
Ironically, this comes on the 20th anniversary of the Soviet withdrawal from Kabul. And the man who commanded those Soviet forces, retired Lieutenant General Boris Gromov, warned the US today that a military surge in Afghanistan will not solve its problems there.
With our putative ally Pakistan increasingly unstable and jihadists carrying out many successful attacks on supply lines and convoys there — they seem to blow up the route over the legendary Khyber Pass every other week — alternative means of supply are increasingly necessary to sustain the US and NATO effort in Afghanistan.
That means, one way or another, Moscow, which can provide transit through its own territory and guarantee transit through Central Asian nations formerly part of the Soviet Union. There’s been a major dance underway for weeks on this, unreported by the conventional media, naturally. …
** “POST-PARTISANSHIP”: HOW IT WORKS, HOW IT DOESN’T. Back in 2007, when he was still an underdog candidate for president jousting with John Edwards (remember him?), Barack Obama said that he liked the “post-partisan” posturings of Governor Arnold Schwarzenegger, the idea that people should set aside their partisan differences to solve big issues. Now, as president, he’s adopted much the same tack, to the dismay of hyper-partisans of all stripes.
They ought to be dismayed, because it works. To a point.
But not in a linear sense.
Let’s take a look at how it went in California, and how it may go in Washington. … From my February 12th column.
** OH, ABOUT THAT “END” OF THE OBAMA HONEYMOON … From my February 9th column.
** OBAMA: RIDING WITH HISTORY. (NOTE: As Barack Obama was inaugurated as the 44th president of the United States, this column was the featured column on the top of the front page of the Huffington Post.) … From my January 19th Huffington Post column.
** 24/7 LIVE TV NEWS FEED FROM RUSSIA TODAY. Russia has re-emerged as one of the world’s great powers. Click here for a live TV news feed on your computer, bringing you English-language, jargon-free, fast-paced coverage of global and Russian news from the new Russia Today channel. You probably already know about CNN International, BBC World, and Al Jazeera. Russia Today, which also features culture, entertainment, and sports, is based in Moscow and is owned and operated by the TV Novosti division of Russia’s state news agency, RIA Novosti.
While it’s quite foolish to expect to see, say, criticism of Vladimir Putin on Russia Today, which I know as a former DemRussia advisor, the channel is very interesting nonetheless. With U.S. cable news chattering away as it does, this sort of respite can be informative. The NWN live link to RT does not constitute an endorsement of the channel’s views. It’s presented as an otherwise unavailable new media window.
** 24/7 LIVE TV NEWS FEED FROM AL JAZEERA. With the US entangled in two wars in the region, it’s valuable to keep up with news and perspectives from the leading Middle Eastern-based TV news network. Based in the Gulf Arab state of Qatar, Al Jazeera is very influential and more than a bit controversial.
Click here for a live TV news feed on your computer. The NWN live link to AJ does not constitute an endorsement of the channel’s views. It’s presented as an otherwise unavailable new media window.
** SCHWARZENEGGER’S CALIFORNIA. Here is my series of five columns on the governorship of Arnold Schwarzenegger for the Los Angeles Times in debate with Pulitzer Prize-winning former Times reporter/editor Bill Boyarsky, whose columns are also included.
Among them is what I’m sure is the first piece examining Schwarzenegger’s legacy as governor of California. Since he will actually be governor of California until 2011. No technology known to be disruptive to the space/time continuum was used in its preparation.
** TRACK GLOBAL AND NATIONAL ENERGY PRICES IN NEAR REAL TIME VIA BLOOMBERG ENERGY MARKET WATCH. After crashing over $147 for yet another record on July 11th, crude oil is trading in the $40 to $41 per barrel range.
The drop of $107 per barrel since the record high over the summer comes on acknowledgment that the weak US and global economy will cut future demand and on the easing of previous geopolitical tensions in the Middle East surrounding a supposed attack on Iran.
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