Thursday, August 27, 2009

This Could Possibly Be A Problem

If even the financial guys are saying there will be a massive numbers of bank closings, then there's a problem.
The US banking system will lose some 1,000 institutions over the next two years, said John Kanas, whose private equity firm bought BankUnited of Florida in May.

“We’ve already lost 81 this year,” he told CNBC. “The numbers are climbing every day. Many of these institutions nobody’s ever heard of. They're smaller companies.”

Failed banks tend to be smaller and private, which exacerbates the problem for small business borrowers, said Kanas, who became CEO of BankUnited when his firm bought the bank and is the former chairman and CEO of North Fork bank.

“Government money has propped up the very large institutions as a result of the stimulus package,” he said. “There’s really very little lifeline available for the small institutions that are suffering.”

This comes at a time when the FDIC has established new rules on bank sales. Private equity, for instance, would have to hold double the capital of their competitors in order to buy such an institution, said Kanas.

“This will have somewhat of a chilling effect on our participation,” he said. “As a result of having to keep higher capital levels, we’ll see lower prices coming from that sector.”

In other words, the small banks die, their assets get eaten up, we pay for the mess and the larger banks get bigger. But that's the way the forced consolidation of the financial industry rolls.

Democrats Sappin' My Bodily Fluids

Dave "Birther Watch" Weigel catches the GOP scaring the crap out of their own again.

I just chatted with Raymond Denny, the 64-year-old La Center, Wash., man who received the RNC’s “2009 Future of American Health Survey,” which alleged that President Obama’s health reform plans might discriminate against Republicans. Here’s the survey question:

Picture 59

“I’ve been getting these things for years,” said Denny, who opened the letter with his wife Louise, “getting them from the Republicans, getting them from the Democratic Party, usually with the wrong name on it. This thing says I’m a sustaining member. They word these things to solicit the answer they wanted. This one here we looked at and said, “Wow, that’s way beyond the pale of what should be done.”

So, Republicans are sending out surveys to people asking them if they should be concerned about Democrats using government health care to kill all Republicans. This is basically an official Republican survey here, folks. This is going out to millions of Americans, questions like "Does it concern you that the liberal media has gone to unprecedented levels to only give Obama's views on health care and no one else's?" (Nice touch, refusing to call him President Obama) and "Rationing of health care in countries with socialized medicine has led to patients dying because they were forced to wait too long to receive treatment. Are you concerned that this would be inevitable in the U.S. under the Democrats' plan?"

Gotta love how fair and balanced THAT is. As Digby says,

How long is everyone going to deny just how fucking crazy mainstream Republicanism has become? And when are people going to start asking seriously where this is headed?
I've been asking that for months now. The inevitable, logical endpoint of all this the Tree of Liberty getting some fresh transfusions of blood, of course.

The Wingers are running the party now, and they are baying for blood. It's only a question of when the next victims will be hurt or killed while the crazies yell "You damn liberals called Bush Hitler too!" while reloading.


The New Republic's Jon Chait loved him some Sensible Centrists in 2006, calling progressives behind the efforts to primary Joe Lieberman out of office in 2006 "fanatics". This week, Chait has changed his tune, suddenly seeing the light that corporate drones like Lieberman are killing Obama's agenda.

Needless to say, this hypocrisy has earned him the deadly eye beams of one Double G Glenn Greenwald.

My, what a rapid and total reversal -- one effectuated without the slightest acknowledgment that it even occurred. But that's just the accountability-free nature of Beltway punditry. There's a more important point highlighted here: namely, it is a sign of how dysfunctional the Democratic Party is -- and how meaningless is their glorious super-majority -- that even The New Republic, which long prided itself on safeguarding the Party from nefarious left-wing influences, is now calling for "centrist" Democratic Senators (even including Joe Lieberman) to be thrown out of office by means of primary challenges (I believe that was once called a "purity purge"), even if doing so results in a loss of Democratic seats. Chait's rationale is that allowing "centrist" dominance within the party means that the same corporate interests (rather than the interests of constituents) and the same political agenda end up being served regardless of which party is in control, meaning that -- as he put it -- even "a filibuster-proof Democratic majority isn't worth having" because nothing meaningful changes. You don't say.

That, of course, was exactly the motivating premise of those who sought to remove Joe Lieberman from the Senate in 2006 -- the people Chait demonized back then as "left-wing fanatics" who "refuse to tolerate any ideological dissent." That was also the animating principle behind the founding last year of Accountability Now, largely designed to recruit and enable meaningful primary challenges against corrupt, unaccountable, and worthless corporate-serving incumbents.
Ahh, Double G in Righteous Indignation Mode is a glorious thing to watch, folks. The real problem is that the corporate whoring doesn't stop at Capitol Hill, but heads all the way across to 1600 Pennsylvania Avenue.
While it's lovely that The New Republic has now joined that movement and decided that corporate-owned "centrists" need to be purged from the Party, Chait is laboring under complete blindness about the reasons these problems have arisen. Chait accuses me, Dan Froomkin and "liberals" generally of "confusion" because we believe that the Obama White House bears some of the blame in the dominance of corporate interests generally and in the health care battle specifically. Chait echoes the facially absurd excuse of the most hardened Obama loyalists everywhere: namely, that Obama, Rahm Emanuel and friends are just helpless, impotent observers who wield no influence over the health care debate and can do nothing but sit back and hope and pray that the Senate will pass a good, progressive health care reform bill free of excessive servitude to the health care and drug industries. If the Congress refuses to, well that's obviously not Obama's fault -- a President isn't in the Congress and can't really influence what it does, so this excuse-making goes.

For the moment, leave aside all the evidence to the contrary: that, as Chait's colleague Jonathan Cohn detailed, the Obama White House secretly entered into a deal with the drug industry not to negotiate for lower prices; that Obama has repeatedly sought to empower the Baucus-dominated Senate Finance Committee at the expense of more progressive committees; that the White House aggressively threatens, berates, and cajoles House progressives who impede the President's agenda but hasn't done anything against Blue Dogs; that the strategy of the White House from the start has been to ensure that the health care and drug industries are pleased so that they continue to use their ample largesse to fund the Democrats rather than get behind a GOP takeover in 2010; and that Emanuel built his career and power base by controlling the Congress through the expansion of the Blue Dogs and other "centrist" and "conservative" members and by pleasing corporate donors, thus rendering the image of him as a helpless, passive bystander in the health care debate transparent fiction. Even Dick Durbin -- the Senate's number two Democrat -- acknowledges that, even with a huge Democratic majority, the banking industry "frankly owns" the Congress.

And if you're wondering why we don't have a health care bill signed into law yet, remember that we need a health care bill to be created first, and Obama's done squat in that department, insisting that he leave the process to centrists like Max Baucus. If I didn't know any better, I'd say that both sides are trying to drag the fight out looking for the best way to shift all the blame to the other side, and neither side has any intention of passing a bill.

After all, both sides have been bought and paid for.

Sprained Your Arm Patting Yourself On The Back

The nasty mess around New Mexico Democratic Gov. Bill Richardson is getting messier.

The federal investigation into allegations of pay to play in one state agency may be over, but that doesn’t mean Gov. Bill Richardson is in the clear, a top New Mexico political analyst said today.

In an interview with NMI, Albuquerque pollster and analyst Brian Sanderoff pointed out that federal and state investigators are still looking into allegations in the investment scandal that began in New York and has since spread to New Mexico and other states. That case, which is separate from the probe that has ended, involves some prominent Richardson friends and donors.

The probe that we learned today has ended — the federal investigation into allegations that CDR Financial Products received a lucrative investment contract from the New Mexico Finance Authority in exchange for campaign contributions to Richardson and two political action committees he started — cost the governor the commerce secretary job in Washington. But even as President Barack Obama accepted Richardson’s withdrawal of his nomination for that post in January, the president said he looked forward to Richardson’s “future service to our country and in my administration.”

Richardson said at the time that he would continue serving as governor “for now” and was “eager to serve in the future in any way (Obama) deems useful.”

How nice. The Holder DoJ is letting Richardson skate on the campaign finance shenanigans, but playing the muni bond roulette wheel may be the far more serious crime:
In the investment scandal, the founder of a company that was once New Mexico’s investment adviser is under indictment in New York in a pay-to-play investigation there. Among the allegations is that the founder of Aldus Equity, Saul Meyer, helped the son of New York’s then-state comptroller win an investment contract in New Mexico in exchange for his company getting increased business in New York.

In addition, Richardson has taken $20,000 in campaign contributions from another man tied to the scandal who is reportedly negotiating a settlement in New York to avoid criminal charges.

In other words, somebody's cutting a deal for Richardson's neck.

Keep an eye on this one. You thought Rod Blagojevich and Eliot Spitzer's downfalls were amusing (and Mark Sanford's slow-mo train wreck may end up one for the books) and hey, let's not forget Sarah the Quitter, but Richardson may end up being the disgraced Governor with the biggest price tag on his tomfoolery.

Also, what's up with the DoJ killing the pay-to-play probe? I can understand if the investment scandal is juicier, but still, it looks bad for Eric Holder...really bad. May want to hold off with the congratulations on that CIA torture investigation if you're burying Richardson's probe there, Sparky.

If I'm Not Back In Thirty Minutes, Call The President

Amanda Marcotte wisely points out ahead of time that should anything happen to her, she damn well wants her death to be used to motivate progressives to carry on her political beliefs.
I’m almost 32 and I’m in good health, so this might seem a little premature. But as the President pointed out that even young, healthy people should have living wills, the occasion of Ted Kennedy’s death---and Paul Wellstone’s before it---makes it clear that anyone who is a liberal in the public eye at all should explicitly spell out their wishes about the “politicization” of their deaths, or else the wingnuts will declare that the only proper way to honor your legacy is to start by undermining it.
Point taken. Should I die, keep on making fun of stupid people. You have my express permission to moon Joe F'ckin Lieberman while you're at it.

Cash From Clunkers

One financial upside (for corporate America anyway) to trading in old clunkers for new cars? Higher auto insurance premiums for those new the tune of $375 million.
Progressive Corp. and Berkshire Hathaway Inc.’s Geico Corp. are among insurers that may benefit from the U.S. “cash for clunkers” program as drivers pay higher premiums to protect new cars.

The government’s vehicle trade-in initiative could yield as much as $375 million in premiums, said Robert Hartwig, the president of the New York-based Insurance Information Institute.

“When they buy that new vehicle, the insurance generally will cost more,” Hartwig said in an interview. “It’s a newer vehicle and people will normally take out full coverage of the car. Any auto insurer would stand to gain.”

A rebound in auto sales amid the clunkers program may bring relief to auto insurers facing pressure from rising medical costs, reduced consumer purchases and declines in the value of fixed-income holdings. Progressive last month reported its first quarterly gain in net income since 2006, and Geico’s profit fell 63 percent in the second quarter on an increase in claims.

A bit of a cautionary note then for much more expensive insurance for people. The insurance companies want new customers, you see.

The Eternal Question one Balloon Juice commenter points out. Are Republicans intentionally racist or just plain stupid?
U.S. Rep. Lynn Jenkins told a recent gathering in northeast Kansas that the Republican Party is looking for a “great white hope” to help stop the political agenda of the Democratic party and President Barack Obama.
Either option of course kinda of disqualifies them from running the country, you know.

Mitt-igating Circumstances

As Steve Benen points out, goofy Village Centrist types are putting forth The Mittster as Ted Kennedy's replacement. This is a pretty horrible idea for Massachusetts, Democrats, Mitt Romney, Republicans, and pretty much everybody, but then again that makes it the perfect Village Centrist Stupid Idea.
This is certainly an ... what's the word ... imaginative proposal. But I don't think it's especially realistic.

First, Romney ran for governor in Massachusetts as a center-left, pro-choice, tolerant New England Republican. He left office after just one term as a conservative with an approval rating in the 30s. Which version of Romney would run for Kennedy's seat? He couldn't run to the right; he'd lose. He couldn't run to the left; it would ruin his presidential ambitions.

Second, Roff may have missed it, but while President Obama's approval ratings aren't as strong as they were, he maintains a 73% approval rating in Massachusetts. It doesn't look as if the Bay State would be anxious to replace Ted Kennedy with a harsh, reflexive opponent of the White House.

And third, by all appearances, Mitt Romney isn't actually a resident of Massachusetts.

Other than these minor details, though, it's a great idea. Run, Mittster, run.

As it is, I forsee Mitt having to distance himself as far as humanly possible from Massachusetts mainly because he was the governor who signed the often-attacked MassCare program into law. That alone puts a massive bullseye on his forehead for every other 2012 primary opponent Wingnut crackpot out there to aim at. The practical upshot is primary voters will realize about, well, now that the only Republican with more than a snowman's chance in Death Valley is Romney, meaning he will be primaried to death by the same intransigent wingnut knuckleheads who'll see Romney as a complete heathen.

In other words, 2012 should be a glorious disaster. Even better, there's no way Romney wins in 2010, either...and to win he'd have to go so far to the left that he'd never even get out of the gate in 2012.

[UPDATE 1:38 PM] Nate Silver runs the numbers on any Republican's chances to win Ted Kennedy's seat, and comes up with "very probably not."

Speculation aside, Mitt Romney is probably smart enough to know this (whatever else you might say about him, Romney's not lacking for brainpower). Romney has a pretty good brand and probably 75 percent-plus name recognition among likely voters. And last I checked, you don't have to be popular in Massachusetts to become elected President. Running for the Senate seat is virtually a pure downside play for him.

As for other Republicans in Massachusetts, their prospects don't figure to be much better. This is mostly because there aren't very many of them. Something like 40 percent of U.S. Senators had been U.S. Representatives at the time of their election -- but all 10 of Massachusetts' U.S. Reps are Democrats. Statewide office holders like Lieutenant Governors and Attorney Generals have also had their share of success when running for Senate -- but Massachusetts' A.G., Lieutenant Governor, Secretary of State and State Auditor are all Democrats. State Treasurer Timothy Cahill is a Democrat-turned-independent, but he's expected to run for governor instead. This, incidentally, is another layer of protection that the Democrats have -- any Republican worth his salt should be trying to knock off the unpopular Deval Patrick, rather than trying to win Ted Kennedy's old seat. Unless William Weld is interested -- and Weld endorsed Barack Obama and might vote with the President anyway on issues like health care and cap-and-trade -- this one is probably a pipe dream for Republicans.
Seems to be some very reasonable logic there.

If It's Thursday...

570,000 new jobless claims, down a smidge. Continuing claims down to 6,152,000 but still above that six million mark.

GDP revision for second quarter revised to a 1.0% contraction. Better than expected.

More Village History

The more wrong about political analysis you have been in the last ten years, the more respect and clout you have in the Village. Doug at Balloon Juice points out Cokie Roberts from 2006, who was convinced that the Dems were going to blow it by pushing to the left:
Yes, I do because I think, first of all, that pushing the party to the left, which is what’s likely to happen, is pushing the party to the position from which it traditionally loses, and In presidential elections but also it will send a signal to everybody in the Senate, watch out, the only smart thing to do here is play to your base, and then what that means is that your legislation becomes a mess, which it already is but even more of a mess...
In which case Doug notes how wrong she was:
Cokie Roberts uttered these words three years ago. I don’t need to tell you that since then, Democrats have picked up 15 seats in the Senate, 55 in the House, and captured the presidency with the largest percentage of the vote of any Democratic president since 1964. She literaly could not have been more wrong.

I’d feel a lot better if she’d describe health care reform as DOA.

No kidding. I'm waiting for her to say it's dead, because I then know it's a guaranteed bill this year signed into law.

Sadly, Cokie Roberts is not the only denizen of Opposite Land. They still are our political pundit class, known for their wisdom and ability to read the currents of Washington.

Just do the opposite of what they say and you'll be fine. Unless you're a beltway pundit, that is. Then you get Froomkined.

Zandar's Thought Of the Day

South Carolina Republicans are lining up to take their shots at Gov. Mark Sanford ahead of this weekend's state GOP meeting in Myrtle Beach, including his own Lieutenant Governor asking him to step down. Sanford proclaims he "won't be railroaded." But in the Court of Wingnut Public Opinion if Sanford has lost Malkinvania he's in serious trouble with the GOP.

Tick tock. Tick tock.

Musical Chairmanships

BooMan games out where the Democratic Senate leadership will go with trying to fill the shoes of the late Sen. Kennedy.
Understanding the congressional committees is real inside baseball stuff. But it matters a lot who controls which committees. For example, the fact that Max Baucus is the chair of the Finance Committee is greatly complicating Obama's efforts to pass a health care reform bill. Now that Teddy Kennedy has passed on, the Senate is about to embark on a game of musical committee chairs. How it plays out will have consequences, so I want to run through it for you.

You may have noticed that Sen. Chris Dodd (D-CT) ushered the health care bill through the Senate Health, Education, Labor, & Pensions (HELP) Committee. He did that both because he was Kennedy's best friend and because he is the second highest ranking member of the committee. That means that Dodd has the first right of refusal on taking over the chair of HELP. That must be an attractive choice because Dodd's reelection prospects are looking quite sketchy due to the fact that he was the chair of the Senate Banking Committee in 2007-8 and didn't do anything to avert the financial meltdown. Taking over HELP will allow him to move on, and attract the support of teachers, nurses, and other members of labor movement. If health care reform passes, he'll be able to take a lot of the credit.

But Dodd is vulnerable in 2010, and things get a lot more complex and complicated. Traditionally, the full committees have one chair, and a Senator is not traditionally allowed to chair more than one full committee. Dodd could jump to HELP from Banking, and from there, things get messy.
To summarize, Dodd and Lincoln are two of the most vulnerable Senate Democrats who will be facing the voters in 2010. Dodd can help himself by moving from Banking to HELP. If he stays at Banking, he helps Lincoln by letting her get a hold of the chair of Agriculture. If Dodd leaves Banking, the duties there will fall to either Tim Johnson (bad) or Jack Reed (good). And Kennedy will be replaced by either Dodd, Harkin, or Mikulski (all of whom are satisfactory).

And, no, we can't make any difference in how this shakes out. It's all inside baseball.

We'll see how it shakes out, and I wholeheartedly agree all this does matter, like BooMan says, you have to look no further than Max Baucus to see that.

The Biggest Busted Bank Of Them All

The FDIC's fund for dealing with busted banks is rapidly running out of money, and the fund itself could be in the red before the end of the year. Eighty-one busted banks will do that.
The coffers of the Federal Deposit Insurance Corp. have been so depleted by the epidemic of collapsing financial institutions that analysts warn it could sink into the red by the end of this year.

That has happened only once before — during the savings-and-loan crisis of the early 1990s, when the FDIC was forced to borrow $15 billion from the Treasury and repay it later with interest.

The FDIC on Thursday will disclose how much is left in its insurance fund, and update the number of banks on its list of troubled institutions. That number shot up to 305 in the first quarter — the highest since 1994 and up from 252 late last year.

FDIC Chairman Sheila Bair may also use the quarterly briefing to discuss how the agency plans to shore up its accounts.

Small and midsize banks across the country have been hurt by rising loan defaults in the recession. When they fail, the FDIC is responsible for making sure depositors don't lose a cent. It has two options to replenish its insurance fund in the short run: It can charge banks higher fees or it can take the more radical step of borrowing from the U.S. Treasury.

And as I said last night, with dozens of banks effectively insolvent, it's only a matter of time before the FDIC has to raise billions from somebody. Who's going to pay for all this?

Here's a hint: who's been paying for all this so far? Here's another hint: it sure as hell hasn't been the banks.


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