Digby's Hullabaloo Posts

Rep. Conyers On Why We Need Cram-Down

by dday

Yesterday, Nancy Pelosi announced that a housing bill which could come up for a vote this week would include the “cram-down” provision, which would allow bankruptcy judges to modify the terms of mortgages for borrowers on their primary residence (currently judges have the ability to do this on secondary residences). This is an important provision, which most economists believe will be the best tool homeowners can have for them to stay in their homes, and for lenders to agree to loan modifications. The banksters hate this idea, mainly because they know it would blow the whistle on their consistent violations of the spirit and the letter of the Truth In Lending Law, in their mania to lock as many people into mortgages as possible without regard for ability to pay, so they could sell those mortgages on as securities, and so on and so forth. This ultimately is the fault of the lender, who are clearly the irresponsible ones in the whole scenario.

Along with my friends at Brave New Films, I talked to Rep. John Conyers, the chair of the House Judiciary Committee and the author of HR 200, the cram-down bill, about this provision and why it’s needed at this time.

We know that the housing bubble bursting was a major, if not the major, cause of the current financial crisis. And we have as many as 10 million homeowners at risk in the near future for foreclosure, or for being underwater on their homes as prices crash. With securitization slicing and dicing mortgages into tiny parts and selling them all over the world, it’s nearly impossible for homeowners to bargain with their lender – it’s hard for them to know who even owns the property. And while it costs lenders to have a home revert back to them in foreclosure, both on the defaulted mortgage and on continued upkeep of the house until resale, there are perverse incentives for them not to enter agreements with homeowners that will allow them to stay in their homes. Barack Obama’s plan seeks to incentivize in the other direction to get loans modified, but only cram-down will really bring the lenders to the table. As Rep. Conyers says, this “levels the playing field” and gives homeowners a tool to bargain with the lenders. Currently they have none. While Obama’s plan holds open the option for cram-down, and he has been supportive of the change in bankruptcy law, we really need legislation to define this specifically.

Mind you, practically every other asset that anyone who goes into bankruptcy has – second and third homes, yachts, cars, you name it – is eligible for a rewriting of terms by the bankruptcy judge. It’s only the primary residence that is excluded. This is perverse and seeks to only benefit the wealthy. Far from encouraging bankruptcy among the poor, this bill would encourage the bankers to help them avoid it. As Conyers said:

The very people that prevented the bankruptcy judge from having this power in the first place are the ones now that are most seriously resisting us giving it to them, even while we’re in a national crisis. You know, it’s amazing how greed and self-interest makes people forget about the fact that we’re in a recession that could get much worse. It could be a depression. And by the way, this helps not just the poor borrower who may be locked up or laid off or their job has moved away or anything may have happened, but what we’re doing now is that we’re saying the judge has the authority to help everybody. You know, the more houses that are put into foreclosure, the more run-down the neighborhoods become, and also the more property of everybody is involved. This provision is to keep you from going into bankruptcy.

This is a classic political argument, as Mike Lux argues, between those “rugged individualists” who think everybody should be out for themselves (except when their investment firms and giant insurance companies are about to go under), and those who think we are linked and we have a responsibility to our brothers and sisters, as surely as they do to us. Forcing everybody off a foreclosure cliff makes no sense to either those newly homeless or the property owners who will see their values plummet. And contra the Santelli revolution, the public basically gets this.

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The Speech

by digby

For those of you who are unable to hear the speech tonight, here’s the prepared text. It’s good.

It was very moving to see Justice Ginsberg there.

And, once again, I’m struck by just how relieved I am. I can’t even imagine the despair we would be feeling if the last regime were still in charge during these troubled times. (Just remembering the glowering visage of Dick Cheney sitting there is enough to send shivers down my spine.) It’s like fate intervened (or just random luck) at the last possible moment. Even the Republicans seem to be letting out a deep breath…

Update: I’m listening to Jindahl and finding it hard to believe that this guy is the great Republican hope.

I’m also getting angry. He, like all conservatives, is a hypocritical, lying jackass. It’s really, really hard not to just say that the people who voted for this creep don’t want any help and so they shouldn’t get any. Unfortunately, there a whole bunch who didn’t and a lot of children who don’t deserve to pay the price for their parents’ folly.

But my God, I’m gobsmacked by the fact that he actually raised Katrina in the way he did, suggesting that they didn’t need government help. I just don’t know what to say about that.

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He Did?

by digby

AP – document.write(getLocalTime(‘Wednesday, February 25, 2009 1:04:50 AM’,’en-US’)); Tuesday, February 24, 2009 5:04:50 PM

By JENNIFER LOVEN

Standing before a nation on an economic precipice, President Barack Obama told worried Americans Tuesday night the U.S. has reached a dire “day of reckoning” that will require boldness and long-term vision to create lasting revival and prosperity.

President Obama is not scheduled to speak for 45 minutes.

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Hello?

by digby

Can someone tell Chris Matthews that Arnold Schwarzenneger did not actually enact health care reform in California? He’s been saying it for days now and nobody ever corrects him.

They can’t even keep the lights on in this state, much less pass universal health care. What the hell is he talking about?

Here’s what happened:

Small: ABX1 1 got 1 “aye” vote, 7 “nos” and 3 abstentions. Nunez slumped in a chair as the committee – for now – put an end to health care reform in California.

Daniel Zingali: Obviously that was disappointing.

Small: Daniel Zingali is the governor’s health care policy analyst and one of the architects of the bill. Working nights and most weekends, he managed to win support from unions, business groups, and nearly all the major health insurers in the state. Zingali even got California hospitals to agree to a tax to make health care reform work.

Zingali: That’s the system we have, though – where there can be a year of momentum built, securing all the stakeholder support that the governor secured, passage in the Assembly, agreement between a Democratic majority in the Assembly and a Republican governor – and one panel can vote it down under intensive lobbying from those who remained opposed.

Small: Zingali’s most powerful opponent was Blue Cross, the largest private health insurer in the state. Blue Cross refused a recorded interview for this story. But in a letter to the Senate Health Committee before the January vote on the bill, Blue Cross said ABX1 1 would increase premiums “when affordability is already a barrier to coverage for many Californians.”

Blue Cross also said it “strongly believes in guaranteeing individuals access to coverage” – but without “unintended consequences” that could raise health care costs. Daniel Zingali’s interpretation: the bill would have required health insurers to cover to anyone who applied – and to spend more on medical care. Zingali says Blue Cross didn’t like that.

Zingali: They want to be able to turn people away for their health histories and they don’t like the idea of having to spend at least 85 cents of the dollar on patient care.

Small: In its lobbying effort against the bill, Blue Cross hired PR firm Goddard Clausen for $2 million. That’s the firm that created the “Harry and Louise” TV ads to defeat the Clinton universal health care reform plan. They showed a middle-aged couple sorting through medical bills at the kitchen table.

Louise (from Harry and Louise commercial): (sighs) This was covered under our old plan…
Harry: That was a good one.
Narration: Things are changing and not for the better.

Small: Blue Cross paid another 3 million for Sacramento lobbyists to defeat ABX1 1. Altria – the parent company of cigarette maker Philip-Morris – spent almost $350,000 to lobby against the bill.

The tobacco giant got involved when the proponents added a tax on cigarettes to help pay for health care. The governor’s health czar Daniel Zingali says lobbying by two well-heeled opponents definitely hurt the bill.

And then the Democrats folded.

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Backing Into The Mandate

by digby

According to Ezra Klein, the White House is telling him that they fully expect congress to include mandates in their universal health care plans:

The reliance on Congress also helps the administration overcome the hangover from the campaign. During the primaries, Hillary Clinton attacked Obama’s health care plan for lacking a mandate and, thus, not covering every American. “If you don’t start with the goal of covering everybody,” Clinton said, “you’ll never get there.” In reply, the Obama team struck back with charges that Clinton would “force people to get health insurance” and require “harsh, stiff penalties on those who don’t purchase it.” But even in the heat of the campaign, Obama’s advisers sought to quietly signal their candidate’s openness to an individual mandate. “The fact is,” said David Cutler, the Harvard health economist who served as one of Obama’s key health care advisers, “the policy differences on the mandate issue aren’t that large at all. Senator Obama believes they’re an option down the road, if other approaches don’t work.” And administration insiders then and now emphasized that the Obama campaign didn’t start the mandate fight: They felt blindsided by the attacks and compelled to respond in kind. But it was a question of politics, not of principle. In principle, they were open to a mandate if they could be convinced that it was superior policy and superior politics. Evidently, they’re convinced.

It’s good to know that controversy was just “a question of politics, not principle” although I do have to wonder why anyone would think that’s something that should be publicly discussed. And I really hope the Republicans are so confused and discombobulated that they don’t use the earlier campaign words against the Democrats because the plan is coming from Max Baucus instead of the administration. Fingers crossed.

But somebody is owed an apology.

Update: Going for Universal Health Care is an unalloyed good thing, and I totally support it. Good for the president and the administration for going for it.

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Out Of Iraq! In 19-34 Months

by dday

The background here is that, per Gareth Porter, Petraeus and the commanders didn’t want any withdrawal from Iraq, but Obama insisted they draw up plans. So they rsignedly offered a menu of a 16-month, 19-month, and 23-month withdrawal. Obama predictably chose the one in the middle.

The United States will withdraw most of its troops from Iraq by August 2010, 19 months after President Barack Obama’s inauguration day, according to administration officials who expect Obama to make the announcement this week.

The withdrawal plan would fulfill one of Obama’s central campaign pledges, albeit a little more slowly than he promised. He said he would withdraw troops within 16 months, roughly one brigade a month from the time of his inauguration.

The U.S. military would leave behind a residual force, between 30,000 and 50,000 troops, to continue advising and training Iraqi security forces. Also staying beyond the 19 months would be intelligence and surveillance specialists and their equipment, including unmanned aircraft, according to two administration officials who spoke on condition of anonymity because the plan has not been made public.

A further withdrawal would take place before December 2011, when the U.S. has already agreed with Iraq that it would remove all American troops.

So, just residual forces by August 2010 when the combat withdrawals are done, and a full withdrawal of all forces by December 2011 as per the status of forces agreement.

It’s a slightly lengthier stay, but we are on the path of leaving Iraq and that misbegotten war. And also, Obama is both asserting control over generals that wanted to continue the war while agreeing to a 3-month delay in pulling out. I’ll accept it, because it moves us to a better path, for the security and safety of our troops (who would be giant targets if we didn’t agree to the SOFA and leave), the ability to work with our allies, the long-term stability of the Iraqi people (who won’t be under the boot of an occupier), and our domestic fiscal situation.

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Tired Pilotsby digby
This makes me not want to fly anymore:

Sullenberger, a 58-year-old who joined a US Airways predecessor in 1980, told the House aviation subcommittee that his pay has been cut 40 percent in recent years and his pension has been terminated and replaced with a promise “worth pennies on the dollar” from the federally created Pension Benefit Guaranty Corp. These cuts followed a wave of airline bankruptcies after the Sept. 11, 2001, terrorist attacks compounded by the current recession, he said. The reduced compensation has placed “pilots and their families in an untenable financial situation,” Sullenberger said. “I do not know a single professional airline pilot who wants his or her children to follow in their footsteps.” The subcommittee of the House Transportation and Infrastructure Committee heard from the crew of Flight 1549, the air traffic controller who handled the flight and aviation experts to examine what safety lessons could be learned from the accident. Sullenberger’s copilot Jeffrey B. Skiles said unless federal laws are revised to improve labor-management relations “experienced crews in the cockpit will be a thing of the past.” And Sullenberger added that without experienced pilots “we will see negative consequences to the flying public.” Sullenberger himself has started a consulting business to help make ends meet. Skiles added, “For the last six years, I have worked seven days a week between my two jobs just to maintain a middle class standard of living.

I don’t want pilots working seven days a week, do you?
The point they raise is very important. The pension system in the US is well and truly screwed and with the stock market crash the idea that private investment in the market would completely replace it is now moribund. If anything, all this financial carnage argues for strengthening social security with higher benefits, not lower ones. And Pete Peterson and the reformers most assuredly don’t want that:

When I began working on the issue of Social Security, at Harvard Law School in 1978, Pete Peterson, a prominent conservative who had been secretary of Commerce under President Nixon, was arguing that the problem with the program was that the benefits were too high. With the average widow’s benefit at $500 a month back then, Peterson — a Wall Street banker to boot — didn’t get too far with his argument.

That article, by the way, was written by a conservative who was arguing for social security privatization on the merits as a way to raise benefits. Just imagine if those arguments had succeeded. Actually, we don’t have to:

Italy did for retirement financing what President George W. Bush could not do in the U.S.: It privatized part of its social security system. The timing couldn’t have been worse.

The global market meltdown has created losses for those who agreed to shift their contributions from a government severance payment plan to private funds meant to yield higher returns. Anger is rising both at the state, which promoted the change, and money managers such as UniCredit and Arca Previdenza, which stood to profit.

Prime Minister Silvio Berlusconi’s administration is now considering ways to compensate as many as 1.2 million people who made the switch, giving up a fixed return for private plans linked to financial markets. It’s also letting people delay redemptions on retirement funds to avoid losses after Italy’s benchmark stock index fell 50 percent in 2008, destroying 300 billion euros ($423 billion) in wealth.

“The reform didn’t help anyone,” said Gabriele Fava, who heads the Fava & Associati law firm in Milan. “Not the government, which was hoping everyone would make the switch to take the strain off its coffers, nor the workers who have not resolved the problem of needing a supplement to their social security pensions.”

To be fair, Pete Peterson has just jumped on any anti-social security bandwagon that came along over the years. He wasn’t a particularly enthusiastic privatizer, although he certainly backed it.
As his pal relates above, he just thinks social security and medicare are “bankrupting” the country and he’s thought so since the 70’s, constructing new arguments all along the way when his dire predictions failed to materialize. It’s clear that he just doesn’t believe the government should be performing this function (which raises the question of what he thinks the government should be doing…)

But regardless of their motivation, anyone who was pushing privatization, which was sweeping the nation just three years ago, is no longer credible, period. As bad as things are with the housing crisis, the banking crisis, the stock market crash and the recession, if they had passed social security privatization during their 15 year or so crusade, the results would now be catastrophic.

Again, why are we listening to them?

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Bipartisan Coalition On Screwing The Unemployed

by dday

The public has internalized the concept of bipartisanship as practiced by George Bush – he meant it as “Everyone agrees with me,” and the public wants to see bipartisanship defined as everyone agree with Obama. This won’t make it into many high Broderist discussions, but people seemingly want the agenda that they actually voted for. What a concept.

However, there are some issues where Democrats and Republicans are able to get together and agree. Especially when the “Democrat” in the scenario is a corporate whore who wants to punish the unemployed.

Tennessee and Georgia may turn down some of the economic stimulus money if the restrictions outlined in the package cause budgetary hardship in the future, the governors said Monday.

After meeting with President Barack Obama, Tennessee Gov. Phil Bredesen said some provisions in the package for unemployment benefits would force states to expand their programs permanently, even though the stimulus funding only lasts for two years.

“We are evaluating this piece of money, whether it makes sense for us to take it,” he said. “We may well be one of the states that say we can’t take on that portion of it.”

In short, these Governors don’t want to take money now to qualify more people for unemployment, fearing that increased eligibility would remain in 2-4 years when the federal dollars run out, costing employers in their state money. The concerns always seem calibrated to industry and the Chamber of Commerce, oddly enough. Never mind that extending unemployment benefits is one of the most effective stimulus programs there can be and the increase in consumer spending as a result will outweigh any projected and purely conjectural costs years down the road (don’t take my word for it, take the word of noted liberal hippie Ben Bernanke).

Chuck Schumer is out with a letter arguing that the stimulus isn’t an a la carte menu and that Southern Governor grandstanding aside, picking and choosing is not an option:

As you know, Section 1607(a) of the economic recovery legislation provides that the Governor of each state must certify a request for stimulus funds before any money can flow. No language in this provision, however, permits the governor to selectively adopt some components of the bill while rejecting others. To allow such picking and choosing would, in effect, empower the governors with a line-item veto authority that President Obama himself did not possess at the time he signed the legislation. It would also undermine the overall success of the bill, as the components most singled out for criticism by these governors are among the most productive measures in terms of stimulating the economy.

For instance, at least two governors have proposed rejecting a program to expand unemployment insurance for laid-off workers. Economists consistently rank unemployment insurance among the most efficient and cost-effective fiscal stimulus measures; by one frequently cited estimate, it provides an economic return of as high as $1.73 for every dollar invested. Thus, by denying this provision for their residents, these governors are not just depriving some of the neediest Americans of relief in a dire economy; they are undermining the overall stimulative impact of the package.

Big thanks to Phil Bredesen for giving this rank political grandstanding a patina of bipartisanship. Really helps the country.

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Let Us Pray

by digby

From Think Progress:

On C-SPAN’s Washington Journal this morning, Sanford received a call from a Charleston resident who said he lost his job because he has been taking care of mother and sister, both of whom have serious illnesses. The caller told Sanford he is “wrong” to decline the money. “A lot of people in South Carolina are hurting. And if this money can come and help us out we need it.” In response, Sanford could offer him only his prayers:

CALLER: I hope you all are not playing politics with this. People in South Carolina are hurting. You know how unemployment rates are high right now and going up higher. We are running out of money in the unemployment bank — we need money for that, the people that need help. And I’m one of them, I can’t get no help. […] SANFORD: Well I’d say hello to Charleston because its home and I’d say hello to this fellow this morning and say that my prayers are going to be with him and his family because it sounds like he is in an awfully tough spot.

Sanford offered no other alternative solution for his constituent and instead argued that the state could not accept money to extend unemployment benefits because “increasing the tax on unemployment insurance” would negatively “impact the caller’s family” (although he didn’t say how).

Oh, that’s what Sanford meant a couple of weeks ago when he said “we are moving toward a savior-based economy.”

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Twits

by dday

The Politico, seeking to prove its commitment to substantive journalism, had an article today about the 10 most influential DC Twitterers. Enough said on their claims to substance. But they do hit on a mini-phenomenon; unlike blogs, which the Beltway media was slow to accept and embrace, Twitter has become something of a hit. Which makes perfect sense. After all, if you knew nothing about a topic except the barest outlines of the “who’s winning/who’s losing” dynamic, you’d want to limit yourself to 140 characters, too.

I’m not saying that Twitter is useless: it’s a good publishing tool for quick news bytes and reporting from spaces where a computer is impractical. The best information from the California budget standoff came from the few reporters and advocates left in Sacramento updating their Twitter feeds (of course, that says more about California’s political media than it does about the medium). However, reading the blurb for Ana Marie Cox’ designation on the list, it appears that to them, Twitter has just become Village IM:

The former Wonkette makes the cut for two reasons: productivity and popularity. At 54,000 followers and climbing, Cox’s tweets (sometimes as many as 100 a day) are among the most followed in Washington. With attitude and humor, Cox documents just about everything: White House briefings, her cats, her former employers, her ongoing debate about whether to wear pants around the house — and political sound bites on TV that could pass for bad pickup lines at a bar (“My filibuster lasts all night long”).

Usually DC gets these things 4-6 years after the fact, like my grandparents’ rural small-town radio station (“Coming up, music from a hot new band called The Who!”), but Twitter allows the chattering class the double pleasure of maxing out on their Blackberry usage, along with being forcibly constrained by time and space to definitively not talk about anything of import whatsoever. “John Edwards’ haircut ZOMG LOLZ” fits the format; an analysis of proposed USDA country-of-origin labeling policy doesn’t. And the structure of having “followers” surely appeals to Village types. All in all, it’s better than passing notes in junior high! Actually, kind of the same thing!

This is the by-product of a media utterly consumed with self-regard and groupthink, who cannot conceive of talking about politics without sports analogies and scorecards. And the head Twit of them all, Tweety, has been unwittingly exposed by Chuck Todd:

NBC White House Correspondent Chuck Todd has a theory on why MSNBC’s Hardball host Chris Matthews begged off from running for the Pennsylvania Senate seat held by Republican Arlen Specter. “Because [Chris] had a really good friend of his say to him, ‘What are you going to do when you get there?’ and he couldn’t answer the question and he realized that, and that’s why he didn’t run,” says Todd. “It was a childhood dream to be a senator, but he didn’t know what he was going to do if he got there.”

Eric Boehlert is quite rightly astounded.

Matthews, who has been inside the Beltway for going on, what, four decades, who once worked on the Hill and has been commenting, non-stop, about politics for countless years, had no idea what he’d do if he were a senator.

We’ve said it before and we’ll say it again here: The Beltway press doesn’t do public policy. It doesn’t get it, and it has even less interest in it. So no, we’re not surprised Matthews couldn’t figure out why he’d do, y’know for other people, if he ever got elected.

Twitter’s like a weighty public policy document to this crew.

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