|12:00 AM, Jul 26, 2014 • By IRWIN M. STELZER
Celebrating a fourth birthday and growing nicely. That’s the story of the Dodd-Frank law, designed to end a “too big to fail” banking system that forced taxpayers to bail out bankers who took not only their own banks but the entire financial system to the verge of collapse, and brought on a record recession. Dodd-Frank, which weighed in at over 2,000 pages at birth, has since put on 14,000 pages of implementing regulations, with more to come. Lawyers here in Washington, as always the big winners when the politicians decide to fix something, estimate that the delicious regulation-writing is only half done, and that it will be five-to-ten years before all the required 400+ rules are in place. Enough fees to fund the college education of their children and, with luck, their grandchildren.
Still to come are rules requiring greater transparency for complicated transactions, and tougher rules to govern the credit rating agencies that splashed AAA ratings on duff securities, and still earn their fees from issuers only if their ratings are high enough to allow the transactions to proceed. The SEC has already notified S&P that it might face fraud charges in connection with some of the credit ratings it issued in 2011.
By which time dozens of amendments will have been added to the existing statute. Some 80 percent of the voters polled by Lake Research Partners say tighter regulation of Wall Street is needed. No surprise that President Obama, for whom bankers are his favorite whipping boy -- or a close second to Republicans -- used the occasion of a recent radio interview to call for additional measures to reduce risk-taking by financial institutions. Republican senator John McCain joined with Democrat Elizabeth Warren, the current darling of the White House and the party’s left, to go further: hey introduced legislation to completely separate risk-taking investment banking from plain vanilla deposit-taking. The so-called Volcker rule, which prevents banks from making risky bets with their own capital, will not go into effect until next year, at which time we will find out whether it accomplishes by rule what McCain-Warren aims to achieve by breaking up the banks into separate risky and non-risky institutions.
Regulatory cost is not the only problem Dodd-Frank has created. The regulatory maze awaits banks with assets of more than $50 billion. So banks approaching that size have an incentive to cut back on lending, since the borrowers’ IOUs are assets for the bank. Such credit squeezes by “small” banks hurt their small- and medium-size business customers, the very ones being counted on to grow and create the jobs that might turn the feeble recovery into a robust one, and relieve Fed chairwoman Janet Yellen of any guilt she might feel at tightening monetary policy.
Fortunately, Dodd-Frank seems to have accomplished more than to provide a flow of legal fees.
· The “stress tests” to which banks must submit periodically encourage more sensible management of risk.
· Banks now have “living wills” that lay out liquidation procedures aimed at forcing share- and bond-holders to bear all of the losses should a bank fail; taxpayers presumably will not be called on again to bail out a failed bank.
4:02 PM, Jul 25, 2014 • By MICHAEL WARREN
The Obama administration is preparing to effectively "nullify" the immigration laws of the United States through an executive action, says one Republican senator. As Time reported Thursday, President Obama appears prepared to provide millions of illegal immigrants living in the U.S. work authorization via executive orders:
When President Obama issues executive orders on immigration in coming weeks, pro-reform activists are expecting something dramatic: temporary relief from deportation and work authorization for perhaps several million undocumented immigrants. If the activists are right, the sweeping move would upend a contentious policy fight and carry broad political consequences.
The activists met privately with the President and his aides June 30 at the White House, and say in that meeting Obama suggested he will act before the November midterm elections. They hope his decision will offer relief to a significant percentage of the estimated 11.7 million undocumented immigrants in the U.S. “He seems resolute that he’s going to go big and go soon,” says Frank Sharry, executive director of the pro-reform group America’s Voice.
But Alabama senator Jeff Sessions, a Republican, says in a statement that the "temporary relief from deportation" would be a de facto ending of immigration enforcement:
It has now been extensively reported that these executive actions will likely expand his Deferred Action program (DACA) to apply to an additional 5–6 million adult illegal immigrants. The existing DACA program has been widely misunderstood. The executive action did not, as The Hill writes today, only result in ‘deferred deportations for young undocumented immigrants.’ Illegal immigrants in the interior of the U.S. have already, as a practical matter, been immune from enforcement under this Administration. DACA applies to individuals up to 30 years of age and provides actual amnesty papers, photo ID, and work permits to illegal immigrants—who can then take any job in America.
The President’s planned executive orders would expand this permitting program to another 5–6 million illegal immigrants. This would effectively end immigration enforcement in America.
Sessions goes on to urge Americans to call on their elected members of Congress to not support any bill dealing with the current border crisis that does not "block" the Obama administration's executive actions.
3:19 PM, Jul 25, 2014 • By GEOFFREY NORMAN
CNBC reports the U.S. ambassador to NATO, Douglas Lute, is saying that
Russia has now amassed around 15,000 troops along the border with Ukraine ... a higher figure than one previously cited by the Pentagon.
With the men, comes material as
U.S. intelligence also indicates that Russia plans to soon provide heavier and more sophisticated weaponry to Ukrainian separatists, a Pentagon spokesman said on Friday.
These reports confine themselves to capabilities, with neither Ambassador Lute nor the Pentagon spokesman saying anything about Russian intentions.
But they can’t be good.
2:01 PM, Jul 25, 2014 • By IKE BRANNON
The law does not always deliver what people might consider the “fairest” outcome. But setting aside the law and the various compromises made by elected officials when they crafted it in order to deliver a “fair” outcome would be a costly mistake—costly for every single city, county or state government that borrows money. Unfortunately, this is precisely what may occur in Detroit when the courts finish adjudicating the morass that is the Motor City's historic bankruptcy.
Detroit filed for bankruptcy protection just over a year ago, saddled with $19 billion of debt—most of which is in the form of unfunded pension obligations. Its financial demise was decades in the making, the result of middle class flight combined with a gradually worsening economic climate in the region, all of which was exacerbated by a series of poor decisions made by various governments over the years.
In order to shed its debt, bankruptcy law requires there be a repayment plan that is agreed upon by a majority of each class of creditor. Like almost anything of import in this day and age, the process has become highly politicized: Public employee unions and other Detroit denizens are fighting a public relations battle that is encouraging the under-valuation of Detroit’s assets—namely its historic fine art collection, along with real estate and infrastructure.
The city—not unlike other creditors in the same situation—would prefer to keep these assets, and the state has put together a consortium with various donors to pledge up to $800 million to creditors if the city can retain its art collection. There is significant pressure on the unsecured creditors to acquiesce to such a deal.
There is some evidence that this valuation may be low: An appraiser recently suggested the collection could be worth as much as $4.7 billion, although donor litigation and the practicalities of selling such an immense collection could make it difficult to collect that much in a timely manner. However, political exigencies may effectively preclude that option.
Detroit will certainly not be the last city to file bankruptcy, as communities around the country find themselves facing some of the same fiscal pressures—most notably escalating public pension debt—that exist in Detroit. If the city manages to hold onto valuable assets while bondholders hold the bag it would cause problems for any community that tried to borrow money in the future. Lenders would have a greater reason to believe they would be stiffed in a bankruptcy and ask for a higher interest rate, making it costlier for cities to finance roads, bridges, schools, or other public investments. Taxes would need to be raised and fewer public investments would occur as a result.
One reason that the public employees’ unions have gotten traction in their PR battle is that they can put a empathetic mien onto their campaign—that of their current workers and retirees. However, caricaturing the other side as merely wealthy Wall Street bondholders is mistaken; the people who would be hurt from giving in to the city would be the people whose money is in their municipal bonds, namely current and future retirees from the rest of the country whose money is invested in Detroit’s municipal bonds.
1:54 PM, Jul 25, 2014 • By JOHN MCCORMACK
Congressman Jeb Hensarling of Texas, who serves as the chairman of the financial services committee, wrote a letter to President Obama Friday urging him to stop all Export-Import bank deals with the Russian government and Russian companies:
The situation in Ukraine grows worse every day. Russia bears responsibility for this conflict, including the atrocity of the downing of Malaysia Airlines Flight 17, because Russia is supplying the separatists with advanced weapons and encouraging their attacks on aircraft and on the people of Ukraine. Russia’s actions are in direct conflict with our national interests.
Yet, still, the Export-Import Bank remains open for business in Russia. In fact, total authorizations for deals between Ex-Im and Russia have increased nine-fold since you took office. While your Administration announces sanctions on Russian companies on the one hand, on the other it offers sweetheart deals to Russian companies through Ex-Im. Indeed, some of the very same Russian firms that are being sanctioned by the United States have benefitted from Ex-Im: Vnesheconombank (VEB) and Gazprombank – two state-owned Russian banks.
As you know, Congress is in the midst of debating whether to reauthorize the Export-Import Bank. But in the face of growing Russian aggression, Ex-Im’s continuing – and even increasing – connections with Russian companies, many of them run by Vladimir Putin’s cronies, has got to stop and stop immediately.
Section 2(b)(1)(B) of the Export-Import Bank Charter provides the President of the United States with the authority to deny applications for financing that would benefit Russian companies. I therefore ask you to immediately halt any and all deals the Export-Import Bank is working on with Russia and with Russian companies and to suspend consideration of future Ex-Im deals involving Russia.
Increasing economic sanctions on Russia is not a partisan issue. Only two days ago, you received a letter from Senators Robert Menendez (D-NJ), Carl Levin (D-MI), and Dianne Feinstein (D-CA), the Chairs of the Senate Foreign Relations, Armed Services, and Intelligence Committees, respectively. In their letter, they called on you to “give additional consideration to imposing broader sanctions on Russia’s energy and financial industries, as well as other sectors of the Russian economy as appropriate.” I could not agree more, Mr. President, and a good place for you to start is by halting continued Ex-Im activity in Russia.
Chairman, Committee on Financial Services
cc: The Honorable John Kerry, Secretary of State
The Honorable Jacob “Jack” Lew, Secretary of the Treasury
The Honorable Fred Hochberg, Chairman, Export-Import Bank
The Honorable Maxine Waters, Ranking Member, Committee on Financial Services
Hensarling is currently leading the fight on Capitol Hill to stop the reauthorization of the Ex-Im bank.
But Iowa Dem missed three-quarters of committee hearings.1:52 PM, Jul 25, 2014 • By MICHAEL WARREN
Bruce Braley, the Iowa Democratic congressman running for U.S. Senate, touted his work on behalf of veterans at his state party's 2012 convention. "I fight for veterans every day on the Veterans' Affairs committee," he said. Watch the video below:
But it was reported this week that Braley missed 75 percent of the House committee's hearings in 2011 and 2012, including one day during which he attended three fundraisers. Braley's campaign has claimed he was attending a separate hearing on the Fast and Furious scandal, though there's no evidence the Iowa Democrat was active or even present for most of that hearing, either.
Braley faces Republican Joni Ernst for the open Senate seat in Iowa, and the race is currently a toss-up.
Hosted by Michael Graham.1:05 PM, Jul 25, 2014 • By TWS PODCAST
The WEEKLY STANDARD podcast with editor William Kristol on the United Nations, the conflicts in Israel and Ukraine, and the crisis at the southern U.S. border.
This podcast can be downloaded here. Subscribe to THE WEEKLY STANDARD's iTunes podcast feed here.
12:53 PM, Jul 25, 2014 • By JOHN MCCORMACK
Earlier this week, a three-judge panel on the D.C. Court of Appeals ruled 2-1 that the plain text of the Affordable Care Act only authorizes health insurance subsidies for residents of states that set up their own exchanges. Therefore, the court ruled, the IRS had illegally provided Obamacare subsidies to millions of people in 36 states that relied on the federal exchange.
It's far from clear that the decision will be upheld upon appeal (the 4th Circuit has ruled the law is ambiguous, so the IRS was free to do what it did). But if it stands, the entire law could come crashing down.
Obamacare's supporters have argued that it's foolish to think Congress didn't intend for Americans to get subsidies in states that didn't set up their own exchanges: They ignore the plain text of the law and point out that no member of Congress publicly made that claim while the law was being drafted. On the other hand, there isn't a record of any member of Congress saying before the bill became law that people would get subsidies outside of state exchanges.
But a newly-released video shows MIT professor Jonathan Gruber, widely acknowledged to be the architect of Obamacare, saying in 2012 that "if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits—but your citizens still pay the taxes that support this bill."
Gruber probably has a better understanding of the law than anyone in the country. According to the New York Times, after he "helped the administration put together the basic principles of the proposal, the White House lent him to Capitol Hill to help Congressional staff members draft the specifics of the legislation." But he now tells the New Republic's Jonathan Cohn that his clear statement that people wouldn't get subsidies in states without exchanges "was just a speak-o—you know, like a typo."
That claim looks even more ridiculous than it already does if you watch the video of Gruber's 2012 remarks (first published by Ryan Radia of the Competitive Enterprise Institute):
That clearly doesn't sound at all like a "speak-o."
11:58 AM, Jul 25, 2014 • By JEFFREY GEDMIN
I've lived in Europe the past dozen years—in Berlin, Prague, and London. When it comes to Israel, Europe's ways seldom cease to amaze.
My most recent surprise came from the UK Huffington Post, where I've been included as a blogger for the last two and a half years. During this time, everything I've written—nearly 40 pieces in total—has been posted. Not a single word has ever been edited, not in my musings on capitalism or the Arab Spring, nor on Mandela, Thatcher, Chavez, or Putin.
But then I wrote recently about Israel and Gaza, twice. You guessed it, two pieces rejected. Both within a single week.
The first was turned down without explanation; the second, after some badgering on my part, with the editor informing me by email that "we are only publishing posts on the topic that move the argument forward...and that are totally unbiased on either side."
It's amusing, the bit about only publishing posts that are unbiased. UK Huffington Post news has been anything but balanced, rushing to depict Israelis as perpetrators of atrocities and war crimes. What's more, the very week my two posts were rejected, the HuffPost site published a blog by its opinionated political director, Mehdi Hasan, attacking the Israeli Ambassador in London. "Silver tongued Israeli officials continue to take to the airwaves to defend the indefensible," contended Hasan, among other things. I wouldn't exactly call this "totally unbiased on either side."
UK Huffington Post editors say their blog section "is all about creating debate and opinion. ... the [editorial] team would never censor what someone has to say."
As they say, never say never.
But never mind the Huffington Post. Bias against Israel, and Jews, is hardly a rarity across the EU. This is not just about Gaza and it can pop up anywhere.
In late 1990s, the venerable Frankfurter Allgemeine Zeitung slipped in a story about then British Foreign Secretary Malcolm Rifkind. The prestigious German paper reported that "the Jew Rifkind" had ended a Bonn speech by quoting the founder of the Reformation, Martin Luther: "Here I stand. I can do no other." Huh? "Der Jude Rifkind"? The author of the story explained in defense that readers should know that the Foreign Secretary was quoting a Protestant, even though he was not one. Sigh.
A few years later France's ambassador to the Court of St. James's slipped. In an unguarded moment at a London dinner party he referred to the Jewish state as "that shitty little country Israel." The Qua d'Orsay envoy did not deny making the remark, but did say he found it outrageous that a private observation would find its way into the media. A French Embassy spokesman said at the time the ambassador had "no intention of apologizing."
8:21 AM, Jul 25, 2014 • By MICHAEL WARREN
Matthew Continetti, writing for the Washington Free Beacon, on how Israel can win this war—if the Obama administration gets out of the way:
What Israel should not endure is the premature conclusion of hostilities. Disarming Hamas—seizing its rocket caches, collapsing its tunnels, killing and capturing its forces—is vital to Israeli security. And an artificial ceasefire imposed by outside powers, a ceasefire written in terms favorable to Hamas, would undermine the security gains Israel has made to date. President Obama and Secretary of State John Kerry have given no sign that they recognize this fact. Or maybe they understand it all too well: The Obama administration’s top priority is imposing a ceasefire at exactly the moment when Israel’s military success is becoming clear.
Secretary Kerry arrived in Cairo earlier this week. No one wanted him there. Egypt’s ruler, General Sisi, has no interest in saving Hamas through international diplomacy: The Muslim Brotherhood is his mortal enemy. Kerry then went from Cairo to Jerusalem, where he met with U.N. Secretary Ban Ki-moon, who flew to the meeting on a plane chartered by Qatar, Hamas’ primary source of cash. Kerry also met Israeli Prime Minister Benjamin Netanyahu, who is too gracious to tell the secretary to go back to Boston. (Israel’s former ambassador to the United States, Michael Oren, has said publicly what the Israeli government will not: Kerry is an unwelcome guest.) Next up was Mahmoud Abbas, president of the Palestinian Authority, who honored Kerry’s presence by endorsing Hamas’s call for a “Day of Rage” in the West Bank. Kerry “will soon decide if Hamas and Israel are willing to agree on a Gaza ceasefire,” Reuters says.
Kerry will decide? Who died and made him king?
Read the whole thing here.
7:41 AM, Jul 25, 2014 • By GEOFFREY NORMAN
The Chevrolet Volt is done in Europe. As David Shepardson of the Detroit News reports:
General Motors’ money-losing European unit Opel will halt sales of the Detroit-built plug-in hybrid Opel Ampera [the European version of the Volt] because of disappointing results.
Grand claims and projections were made for the car by both GM and its Washington patrons. They have proven to be about as well-founded as just about everything else coming from those two sources. The car is overpriced, over-engineered, and over-hyped. President Obama once visited a plant where the car is manufactured. He sat behind the wheel of one and gave it his blessing.
The Volt is perfect, however, for the elitist who wishes to make a statement. Just the thing for that short trip down to Whole Foods.
GM, which is busy managing some of the largest recalls in automobile history, is hanging on with the Volt in the U.S. For now. But:
Volt sales fell 34 percent in June in the United States to 1,777 and are down 12.6 percent this year to 8,615. GM cut prices of its plug-in hybrid Volt last year. It’s also offering hefty incentives for its slow-selling plug-in Cadillac ELR, which has sold just 390 vehicles in the first half of the year.
8:30 PM, Jul 24, 2014 • By JOHN MCCORMACK
Congressman Chris Van Hollen of Maryland, the ranking Democrat on the House budget committee, ripped Paul Ryan's anti-poverty proposals.
"Democrats have made clear that we welcome any constructive ideas that can reduce poverty, but we oppose any plan that uses the sunny language of reform as a guise to gut successful poverty-fighting efforts," Van Hollen said in a statement. “The fundamental problem with the proposal Mr. Ryan laid out today is the total cognitive dissonance between it and the Republican budget he authored earlier this year. It’s a case of policy and political schizophrenia on steroids. The core idea of the Ryan proposal is not a new idea at all: it’s nothing more than a block grant gussied up with some bells and whistles. If you look at the block grant proposal in the context of the Ryan-Republican budget, it would dramatically slash the resources available to help struggling families. Mr. Ryan would merge 11 programs, including SNAP, into a block grant. While he claimed today that he intends to do that in a deficit neutral manner, his very own budget would cut that collection of 11 programs by 20 percent compared to current law, amounting to $300 billion in cuts, the biggest single cut being to SNAP."
Van Hollen added that he welcomes "Mr. Ryan’s proposals to reform our criminal justice system and use evidence-based research to determine which programs are succeeding, and I applaud his newfound embrace of expanding the Earned Income Tax Credit to include childless workers. But the majority of what Mr. Ryan is proposing is not new and will not help more Americans get out of poverty. It is part of an ongoing Republican effort to put programs into easily-cut block grants, while at the same time putting new red tape between those who need help and our arsenal of weapons in the War on Poverty that have effectively helped millions of Americans going through hard times.”
Ryan will hold a conference call with reporters on Friday morning to discuss his proposal.
4:46 PM, Jul 24, 2014 • By JOHN MCCORMACK
The Wall Street Journal reports:
The U.S. believes Russia is firing artillery across its border at Ukrainian military positions, the State Department said on Thursday, an assertion that Moscow is playing a more direct role in the Ukrainian conflict.
The latest accusations show U.S. officials raising pressure on Moscow and more closely examining Russian activities near the rebel-held portions of eastern Ukraine since the downing of Malaysia Airlines Flight 17, which Washington blames on pro-Russian separatist fighters.
State Department spokeswoman Marie Harf also said the U.S. has evidence that Russia intends to deliver powerful rocket systems to the pro-Russia fighters in Ukraine, but declined to provide details about the systems or about how officials came to that conclusion.
3:11 PM, Jul 24, 2014 • By MICHAEL WARREN
See update below.
Michelle Nunn is the daughter of former Georgia senator Sam Nunn, and the Democrat is running this November to follow in her father's footsteps. The younger Nunn is a native of Perry, Georgia, but she grew up and went to school in the Washington, D.C., area while her father served in the Senate. That could explain why the Democrat incorrectly identified the state of Georgia's motto. From the Associated Press (emphasis added):
At her stops, Nunn massaged her usual critique of partisan rancor to fit Perdue. “We’re going to give voters something different, as opposed to what they saw the last nine weeks” during the bitter Republican runoff. “Georgia’s motto is ‘Union, Justice, Moderation,’” she reminded her supporters. “I think those are pretty good values.”
The actual motto is "Wisdom, Justice, Moderation." The motto can be found on the state seal and the state flag.
For the open Senate seat in Georgia, Nunn faces Republican David Perdue, who defeated congressman Jack Kingston in the GOP runoff this week.
Update: The AP reporter covering the speech writes in to say his transcription of the Nunn quotation was in error. Upon reviewing his recording, the reporter says that Nunn said the correct motto of "Wisdom, Justice, Moderation."
2:59 PM, Jul 24, 2014 • By JOHN MCCORMACK
During an appearance on the Fox Business yesterday, former Texas congressman Ron Paul said he blames terrorism on American neoconservatives. The Free Beacon reports:
Reason magazine’s Peter Suderman asked Paul, “You have been accused in the past of blaming America for violent acts, for terrorist acts. I want to know first how you respond to that charge.”
Paul called that characterization “a fallacy and a misrepresentation of what I say.”
“I don’t blame America,” Paul said. “I’m America, you’re America. I don’t blame you, I blame bad policy, I blame the interventionists, I blame the neoconservatives who preach this stuff, who believe in it like a religion, that they have to promote American goodness even if you have to bomb and kill people. So you blame policy. That is altogether different.”
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