Thursday, March 26, 2009

Morning Reading: History Lesson Edition

An important history lesson:
Some saw it coming March 25: How did the economy end up this way? Back in 1999, the Gramm, Leach, Blily Act was signed, allowing for major bank and insurance deregulations. Only 8 Senators voted against it. Rachel Maddow talks to Sen. Byron Dorgan, D-ND, one of the Senators who voted against the measure.

atrios: Bushvilles
NYT:
Like a dozen or so other cities across the nation, Fresno is dealing with an unhappy déjà vu: the arrival of modern-day Hoovervilles, illegal encampments of homeless people that are reminiscent, on a far smaller scale, of Depression-era shanty towns. At his news conference on Tuesday night, President Obama was asked directly about the tent cities and responded by saying that it was “not acceptable for children and families to be without a roof over their heads in a country as wealthy as ours.”While encampments and street living have always been a part of the landscape in big cities like Los Angeles and New York, these new tent cities have taken root — or grown from smaller enclaves of the homeless as more people lose jobs and housing — in such disparate places as Nashville, Olympia, Wash., and St. Petersburg, Fla.



Benen: TIPPING BACK THE SCALES....
The politicization of the federal judiciary -- the courts, the Deparment of Justice, U.S. Attorneys' offices -- was one of the more offensive outrages of the Bush era. It's also one of the most consequential.

In a fascinating new piece in the print edition of the Washington Monthly, Rachel Morris explores what went wrong as "loyal Bushies" pushed justice to the right, and what President Obama will have to do to correct the imbalance.

The cronyism and ineptitude that pervaded the Justice Department in the past eight years may have dealt this project a mortal blow -- thanks to the [Bradley Schlozman, former deputy assistant attorney general of the Civil Rights Division], a stint in the Bush DOJ will probably not be considered a stepping stone to greater things. But even if the conservative legal movement advances no further, its successes will reverberate for years to come. Republican appointees now comprise more than 60 percent of appeals court judges, with majorities on ten of the thirteen appellate courts, while Democratic appointees control just one. Many of these Republican appointees are not moderates or pragmatists, but talented, unbendable conservatives. A study by the law professor (and now Office of Management and Budget official) Cass Sunstein found that the judges appointed by Republican presidents from Reagan onward were more consistently conservative in their rulings than those appointed by Eisenhower, Nixon, or Ford. Already the Supreme Court has lurched to the right since the arrival of John Roberts and Samuel Alito, both Reagan DOJ alumni.

Since Barack Obama won the election, many have wondered what he will do to repair the damage that Schlozman and his allies inflicted on the DOJ's integrity. But there is another important question to be asked. Meese's inventive use of the Justice Department ultimately set American jurisprudence on a rightward course. Could Obama use his Justice Department to turn it back?

For all of our sake, he better.

It's a great piece. Take a look.



Ezra Klein on THE INDYMAC EXPERIENCE.

One aspect of the nationalization debate that gets insufficient attention is that the federal government already nationalized a bank: They took over IndyMac Bank in July. Estimates were that cleaning its balance sheet and selling it back to the private market would cost between $4 billion and $8 billion.

So how'd that turn out? Last Thursday, the FDIC completed the sale of IndyMac. Taxpayers sustained a $10.7 billion loss, not including the $2 billion in shareholder wealth that was wiped out. Ryan Grim has the whole story. It's true, of course, that the sophisticated advocates of nationalization hold that nationalization would be less expensive for taxpayers, not inexpensive for taxpayers. But it's worth preparing for a world in which even that will feel awful and look bad. This is one of those situations where even if the liberals see their favored policy adopted, there will be few winners and no sense of triumph.


Sully: Contra Krugman

Nouriel Roubini generally likes the Geithner plan:

I see the Geithner plan as being relevant only to banks that are solvent. For those that are found - after stress tests - to be insolvent I see as the proper solution - -as I have widely written - to nationalize them and thus clean them up to prepare them for re-privatization.

The stress test should do a triage between banks that are illiquid and undercapitalized but solvent given the provision of capital and liquidity and those that, under a reasonable stress scenario are effectively insolvent. Those that are insolvent should be nationalized.

Chris in Paris (AmBlog):AIG execs now crying "blackmail"

Fine. Shut the damned company down and let it go under. The more I listen to these people complain the more it becomes obvious they need to go completely under and restart. Quite frankly I don't care what those in London or NY find offensive or not because the entire country finds them offensive. Let us know how "offensive" the unemployment line is and get back to us. If possible, please send to the NY Times for publication.

AIG Financial Products unit head Gerald Pasciucco told a staff meeting for UK and Paris employees on Monday that he thought a demand for repayments was to a certain extent "blackmail," said a London-based recipient of one of the retention bonuses from the bailed-out insurer.

"The vast majority of people in London have made the decision that the request is pretty offensive," the employee said. "It effectively constitutes blackmail whether it is criminal or not. There is no moral reason to give it back."

A company spokesman, however, said American International Group had no concerns as to the legality of any repayments.
Morals? Are they really talking about morals at AIG? What next? A lecture on business ethics?
Maddow keeps the ConservaDems in the spotlight. Good for her.



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