Senator Schumer's not getting the memos.
by bobswern, Sun Dec 14, 2008 at 08:48:57 AM EST
I consider myself to be somewhat of a diehard Democrat but, lately, Senator Chuck Schumer (D-NY), one of my senators here in New York, is starting to irritate the hell out of me when it comes to our nation's financial mess. At the very least, it sure looks to me--and many others--like Chuck really needs to get out more often. Apparently, others in the financial services industry are shaking their heads about this, too.
For starters, maybe he should read-up a little more on what's caused our nation to get into the nightmare it's in now. Concurrently, perhaps, he should stop talking out of both sides of his mouth as far as Wall Street's concerned, because while the New York Times takes notice of this in today's edition, even the little people--like me--are beginning to take notice that there's a bit of a disconnect going on now as far as our reality versus Schumer's public comments about all things Wall Street, too.
I know enough about Schumer to realize that--more than many other members of the Senate--my Senator is right on most of the issues most of the time. But, Chuck, it looks like you've missed a few memos in the past year, for sure!
"He is a strong advocate for families and homeowners to make sure they are not taken advantage of," said Eric Stein, senior vice president at the Center for Responsible Lending, a nonprofit group that combats abusive lending practices.
But, even there, Stein's referencing Schumer's efforts about regulating the mortgage industry, not Wall Street.
And, we all know Senator Schumer did a bang-up job running the DSCC over the past cycle, as well. Those are good things!
But my "Senator Soundbyte"--also more than many other members of the Senate--really does care about how he's portrayed in the fourth estate. So, when a piece like this, "A Champion of Wall St. Reaps the Benefits," appears front and center in this today's New York Times, maybe it will give him pause to stop and reassess his sentiments, both public and private, as far as the economy and Wall Street are concerned.
Today, our "hometown" paper took it to him with regard to his role in our nation's financial crisis. And, to that I say, "It's about time." And, Chuck, if you learn nothing else about all of this, know that you're going to have to work a little harder if you expect your base--that's not Wall Street but people like me by the way--to re-elect you next time out, too.
"Since the financial meltdown, people have been asking, `Where was Congress? Why didn't they see this coming? Why didn't they provide better oversight?' " said Barbara Roper, director of investor protection for the Consumer Federation of America. "And the answer for some, including Senator Schumer, is that they were actually too busy pursuing a deregulatory agenda. Their focus was on how we have to lighten up regulation on Wall Street."
In an interview, Mr. Schumer said that until the recent market turmoil, he did not fully appreciate how much risk Wall Street had assumed and how much damage its practices could inflict on ordinary Americans. "It is a learning process, no question about it, an evolution," he said, adding that he now believed that investors and homeowners must be better protected.
The Times article discusses how Schumer really was somewhat of a champion for Wall Street's successful efforts to underregulate the derivatives markets while simultaneously limiting the Securities and Exchange Commission's abilities to control that sector, too--a sector which is widely perceived by many to be a big part of the problem that got us into this mess in the first place.
"He is serving the parochial interest of a very small group of financial people, bankers, investment bankers, fund managers, private equity firms, rather than serving the general public," said John C. Bogle, the founder and former chairman of the Vanguard Group, the giant mutual fund house. "It has hurt the American investor first and the average American taxpayer."
He (Schumer) has not assigned responsibility to himself or fellow Democrats, saying he had no way of knowing of the misdeeds going on on Wall Street. "I wish I was omniscient," he said. "I'm not."
Sorry, Chuck, but your doo-doo ain't flushing. It's as if you're telling your non-Wall Street constituents--us little people--that you hadn't read a newspaper in the year leading up to September '08, and this meltdown was all 'just such a shock,' right? So, I'm supposed to believe that articles such as this, "Mortgage Meltdown," or hundreds of others like it, never made it into your office over the past year?
"You need to provide safety and security to investors in order to attract them to the markets," Mr. Schumer told Wall Street executives in a speech last month. "On the other hand, you must be sure that regulation does not snuff out the entrepreneurial vigor and financial innovation that drives economic growth and makes financial institutions successful and profitable."
I guess Senator Schumer missed the memo about the fine line between "innovation," and the reality that Wall Street just ignored the rules in search of profits across-the-board--while everyone looked the other way, over the past eight years. Apparently, he wan't reading what Nobel Prize-winning economist Joseph Stiglitz and many others have been saying all along, either:
...When I was chairman of the Council of Economic Advisers, during the Clinton administration, I served on a committee of all the major federal financial regulators, a group that included Greenspan and Treasury Secretary Robert Rubin. Even then, it was clear that derivatives posed a danger. We didn't put it as memorably as Warren Buffett--who saw derivatives as "financial weapons of mass destruction"--but we took his point. And yet, for all the risk, the deregulators in charge of the financial system--at the Fed, at the Securities and Exchange Commission, and elsewhere--decided to do nothing, worried that any action might interfere with "innovation" in the financial system. But innovation, like "change," has no inherent value. It can be bad (the "liar" loans are a good example) as well as good.
To that reality, this how today's NY Times sees it:
And he is seeking some regulatory concessions for some Wall Street supporters. He has proposed, for example, that the government lift a cap on how big the giant banks can get, an issue important to institutions like JPMorgan Chase. Lifting the cap would allow the biggest banks to absorb weaker ones, but it would also limit competition and increase the risks to the financial system posed by failure of one of the giants.
It appears that my Senator conveniently left out the reality that has been front and center for many weeks for everyone else that Goldman Sachs, Morgan Stanley and Merrill Lynch are now all nationally-chartered banks, too.
But, Chuck, for all intents and purposes, the entire banking system is bankrupt! Or, did you miss this "memo" over the past 72 hours on that, as well?
Jim Rogers: Most U.S. Banks "Bankrupt"
By Barry Ritholtz - December 12th, 2008, 3:00PM
Jim Rogers [Rogers, among other things, is George Soros' former business partner] on Thursday called most of the largest U.S. banks "totally bankrupt," and said government efforts to fix the sector are wrongheaded:
"What is outrageous economically and is outrageous morally is that normally in times like this, people who are competent and who saw it coming and who kept their powder dry go and take over the assets from the incompetent," he said. "What's happening this time is that the government is taking the assets from the competent people and giving them to the incompetent people and saying, now you can compete with the competent people. It is horrible economics...
Governments are making mistakes. They're saying to all the banks, you don't have to tell us your situation. You can continue to use your balance sheet that is phony.... All these guys are bankrupt, they're still worrying about their bonuses, they're still trying to pay their dividends, and the whole system is weakened."
As a constituent, I can say that everyone around these parts is finally reading about what's going on with our economy, and the MSM--albeit two or three years too late--is now full of plenty of Monday morning quarterbacking commentary about what got us into this financial mess in the first place. So, it would certainly appear that my Senator should get out more often and understand this is his political reality, too. The last thing--even as a New Yorker--that I'm concerned about, after witnessing an $8 trillion giveaway to parts still unknown on and around Wall Street over the past 90 days, is the "profitability and success" of Wall Street.
The priorities have shifted, Chuck. It's time to focus on the bankruptcy of a system-gone-wild, and cauterizing the mortal wounds that those policies have inflicted upon the rest of your constituents (us New Yorkers), and the entire country, for that matter.
Tags: bailout, Center for Responsible Lending, Consumer Federation of America, Goldman Sachs, John Bogle, Joseph Stiglitz, JP Morgan Chase, Merrill Lynch, Morgan Stanley, Robert Rubin, Senator Charles Schumer, the Economy, Vanguard, Wall Street, Warren Buffet (all tags)