Remember, the Question Is “Are YOU Better Off?” Not “Is Your Boss Better Off?”

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The Romney campaign has started asking the snitch, Ronald Reagan’s question, “Are you better off than you were 4 years ago?” And partly because Obama’s advisors don’t have a ready answer, and partly because Democrats are misconstruing who’s being asked the question, it’s actually a tremendous risk for Democrats.

Before I get into why, let me caveat by saying that, at the moment, we’re not facing the kind of catastrophe we were facing in September 2008 (though that could change, depending on what happens in Europe). And Mitt’s preferred policies would exacerbate all the things I’m going to point to–Obama may not be fixing them adequately, but Mitt’s policies would almost universally make them worse.

But that’s not the response Democrats are giving to the question. Consider the way Josh Marshall answered the question: by pointing to GDP and job losses.

GDP, of course, measures productivity. And the last three years have continued (accelerated, actually) a long-term trend in which employers don’t share productivity gains with employees.

And while jobs aren’t being lost at the rate they were in 2008, that’s only part of the picture. First, much of the decline in unemployment came from people leaving the work force. And as a NELP report showed the other day, the jobs that have been created are disproportionately lower wage.

  • Lower-wage occupations were 21 percent of recession losses, but 58 percent of recovery growth.
  • Mid-wage occupations were 60 percent of recession losses, but only 22 percent of recovery growth.

Read more →

The Quarter Billionaire’s $9 Jobs

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Fairly early in Mitt’s speech last night he said this:

But today, four years from the excitement of the last election, for the first time, the majority of Americans now doubt that our children will have a better future.

It is not what we were promised.

[snip]

It’s not just what we wanted. It’s not just what we expected.

It’s what Americans deserved.

You deserved it because during these years, you worked harder than ever before. You deserved it because when it cost more to fill up your car, you cut out movie nights and put in longer hours. Or when you lost that job that paid $22.50 an hour with benefits, you took two jobs at 9 bucks an hour and fewer benefits. You did it because your family depended on you. You did it because you’re an American and you don’t quit. You did it because it was what you had to do.

But driving home late from that second job, or standing there watching the gas pump hit 50 dollars and still going, when the realtor told you that to sell your house you’d have to take a big loss, in those moments you knew that this just wasn’t right.

But what could you do? Except work harder, do with less, try to stay optimistic. Hug your kids a little longer; maybe spend a little more time praying that tomorrow would be a better day. [my emphasis]

The passage is fundamentally important to the logic of the speech–and indeed, Mitt’s entire campaign–both because it pretends Mitt understands the struggles of average people and because it suggests Obama failed to deliver on Hope and Change.

And at the core of the passage are $9 jobs that don’t pay enough to live on.

Which is funny, because just a few hours earlier, the Founder of Staples, Thomas Stemberg, bragged about Mitt’s role in this:

The truth is Mitt was not a typical investor. He was a true partner. Where some saw an unproven new business, he saw a store that could save people money. He recognized that efficiency creates consumer value. He never looked at Staples as merely a financial investment. He saw the engine of prosperity it could become.

Today Staples employs nearly 90,000 people. It has over 2,000 stores. Over 50 distribution centers.

The average self-reported hourly wage of a Staples EasyTech Associate is $8.89. The average self-reported hourly wage of a Staples Sales Associate is $8.54.

Those jobs Mitt talked about as a symbol of America’s failed promise, the ones that don’t pay a living wage? That’s what Mitt’s campaign boasted about last night as his idea of an “engine of prosperity.”

And it was an engine of prosperity, for Mitt, for Stemberg. Mitt’s worth at least $250 million. Stemberg is reportedly worth $202 million. And they got that money by running an engine of prosperity that relies on workers who are Mitt’s own example of the failure of the American dream. “This just wasn’t right,” Mitt said himself. Read more →

One Truth the GOP Did Tell: They Want You To Work For Yourself

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Amid a flood of lies being uttered at the Republican National Convention this week, there is one truth the GOP has told.

They want you to work for yourself.

The Republican obsession with working for yourself stems from a campaign strategy–to recruit a parade of people–many of them whose businesses suck at the government teat—to “refute” an Obama quote they’re taking out of context, “You didn’t build that”

Here’s how Paul Ryan claimed credit to building a business (he didn’t mention it was made possible by Social Security survivor benefits.

My Mom started a small business, and I’ve seen what it takes. Mom was 50 when my Dad died. She got on a bus every weekday for years, and rode 40 miles each morning to Madison. She earned a new degree and learned new skills to start her small business. It wasn’t just a new livelihood. It was a new life. And it transformed my Mom from a widow in grief to a small businesswoman whose happiness wasn’t just in the past. Her work gave her hope. It made our family proud. And to this day, my Mom is my role model.

But the most absurd case came from Senator, former NH Attorney General, prosecutor, and before that private practice lawyer Kelly Ayotte, who instead of talking about her considerable and impressive professional experience, focused on shoveling snow. (This served the other apparent convention strategy to have all women, save Condi Rice, to define themselves first and foremost as wife and/or mother.)

My husband Joe – who was on track to be a commercial pilot – instead served our great country flying combat missions in Iraq.

When he returned home from the war – he found himself in the same position as so many Americans – he needed a job.

So he started a family business – a landscaping and snowplowing company.

And when I say he – I mean we – because I spent many a sleepless night shoveling snow. And I’m proud of the fact that in addition to being a United States Senator – I’m also pretty good with a snow plow!

Now, Ayotte’s husband Joe Daley’s story could have served any of several narratives. His military service itself. The declining opportunities for airline pilots, an industry repeatedly bailed out by government. The difficult job market for veterans. But instead it became a story about an Attorney making $174,000 a year for her day job in public service plowing snow.

But it’s not just Ayotte’s admirable career in public service that gets short shrift here. While many of the speakers talked about how many employees their small business supported, no one I saw–save Condi Rice, who rightly celebrated her success rising from segregated Birmingham to become Secretary of State–talked about the honor of working as an employee, whether as a public servant or in the private sector.

That points to several larger trend that fits well with the real thrust of the policies Mitt and Ryan would implement. First, the Bain-like stripping of real employment relationships in exchange for transient, insecure contracts. The denial of responsibility anytime a contractor makes a mistake. And perhaps most importantly, a tax system that values wealth creation over work.

The RNC is all about these American Dream stories, and a few of them are actually what they appear to be, stories about entrepreneurs building something of their own with little help from the government. But this is about the value of working hard to own things, not work itself.

Promontory Financial Group Describes a New “Risk-Based” Approach to Anti-Money Laundering

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In light of the recent Standard Chartered Bank flap, Saturday’s report that Deutsche Bank is under investigation for similar behavior, and today’s report that RBS (as well as two other banks, one of which is Sumitomo Mitsui) is as well, I want to look at an article on Anti-Money Laundering enforcement a Promontory Financial Group exec, Michael Dawson, published in American Banker just one week before NY’s Superintendent of Financial Services, Benjamin Lawsky, filed an order against SCB alone.

Around the same time Dawson was writing this, remember, his company was involved in a review of SCB’s laundering of Iranian funds that would show a tiny fraction of the total exposure that SCB would ultimately admit to. That is, Dawson’s comments probably provide a glimpse into what PFG was seeing not just in Citibank and Commerzbank enforcement actions, which he discusses, but also in SCB. And it might help to explain why other regulators were so intent on crafting an SCB settlement based on just $14 million in violations rather than $250 billion.

Dawson reports seeing a change in recent AML/BSA enforcement actions, away from a “rules-based approach” toward a “risk-based approach.” He suggests that regulators are demanding not a broad-based examination of the scope of AML violations, but instead more targeted information about who posed the biggest risk laundering money and what they were doing.

Instead of requiring expensive reviews of extended periods of time for a broad range of potential suspicious activity, the latest enforcement actions emphasize a risk-based approach to AML compliance, with several of the actions requiring a risk assessment or enhancements to an existing assessment.

[snip]

The level of specificity required is noteworthy and includes, among other things, detail on the volumes and types of transactions and services by country or geographic location as well as detail on the numbers of customers that typically pose higher BSA/AML risk. The actions also require a more holistic approach, requiring the results of the bank’s Customer Identification Program and Customer Due Diligence program to be integrated in the risk assessment. [my emphasis]

This sounds like the regulators are interested not in discovering how banks are complicit in money laundering, but rather using the banks to get details on key people who money launder and the tactics just those key people (terrorists, cartel kingpins, mean Iranians) use. (Note, I think something similar, but even more significant, happened last year when JPMC got busted for trading with Iran, but no one seems to remember that happened.)

After making these broad statements about the general direction of AML enforcement, Dawson distinguishes between what the Office of the Comptroller of the Currency is requiring and what the Fed is. OCC has not only shortened the period which it requires banks to examine problematic behavior, but it has also permitted banks to conduct their own reviews (which seems to have Dawson worried about losing the business of providing such services for banks).

Where the OCC required lookbacks, it asked for risk-based, targeted reviews, rather than comprehensive look-backs that were sometimes found in earlier enforcement actions. The recent actions either specify a shorter look-back period than has been specified in the past or, in the case of the Citibank action, no explicitly specified period, subject to the ability of the regulator to expand the look-back depending on the results of the more limited period.

Also, the OCC actions allowed the institutions to conduct the review themselves and either do not explicitly mention an independent consultant or limit the role of the independent consultant to “supervising and certifying” the look-back.

The OCC, at least, doesn’t sound like it’s doing “smarter” enforcement, but rather doing lax enforcement. Remember, though, that OCC got a newly-confirmed Comptroller during this period, who talked aggressively at the recent Permanent Subcommittee on Investigations hearing on HSBC’s egregious AML problems–though that talk partly echoed what Dawson has to say about “flexibility” and a “holistic” approach.

Meanwhile, according to Dawson, the Fed doesn’t seem to be offering quite as much flexibility. Dawson describes the Fed employing this new risk-based approach, but it is still requiring longer reviews (though not all that long, at 16 months) and outside consultants to complete the reviews.

The Fed, in its action against Commerzbank requiring a lookback, also showed some flexibility. Read more →

DOJ Corporate Settlement Dealer Takes Over at FinCEN

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In February, here’s what Jennifer Shasky Calvery said in testimony before a House Subcommittee.

These staggering amounts of money in the hands of some of the worst criminal elements create a terrifyingly vicious cycle – money enables [the crooks] to corrupt the economic and political systems in which they operate, thereby allowing them to consolidate and expand their power and influence, which gives rise to more opportunity to commit crime and generate revenue.

Mind you, I’m cherry picking a quote from testimony about Transnational Crime Organizations. But it shows the blindness DOJ (and the Administration generally) have had as they try to repurpose their counter-terrorism tools to combat transnational crime: to some extent, what’s true of drug cartels is also true of the banks that have escaped prosecution even while doing as much damage as the drug cartels.

And yet we never get around to prosecuting our own transnational criminal organizations, the banks.

It’s worth keeping in mind, now that Shasky Calvery takes over at Treasury’s FinCEN, the part of the Agency that makes sure corporations are complying with reporting requirements of suspected financial crimes.

Read more →

The Gray Lady Falls Off the Balance Beam

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Granted, it pertains to my right-wing governor, so it’s personal. But this NYT profile of Rick Snyder is a remarkable example of the perverse journalistic fetish for “balance” gone so badly awry it amounts to disinformation.

Let’s start with this summarized claim.

Republicans and business leaders here widely praise Mr. Snyder, crediting him with balancing the state’s once-troubled budget, dumping a state business tax and presiding over an employment rebound in a state that not long ago had the highest jobless rate in the nation. [my emphasis]

You’d think a newspaper might want to point out that MI’s unemployment actually turned around in August 2009–well before Snyder’s election in 2010 and not coincidentally the month after GM came out of bankruptcy. Unemployment dropped 3.3% before Snyder took over, dropped a further 2.6% after he did. But more significantly, unemployment in MI has started to creep up again–it’s up .7% since its recent low in April, to 9%.

Setting that record straight is critical to the rest of the article, since it repeatedly gushes about Rick Snyder refusing to deny Obama credit for MI’s turnaround.

Just before the Republican primary in Michigan in February, Mr. Snyder was asked in an interview whether Mr. Obama ought to be given credit for the state’s economic improvements. “I don’t worry about blame or credit,” he said. “It’s more about solving the problem.”

Nowhere in the article does “reporter” Monica Davey consider the possibility that Obama–and, in fact, Jennifer Granholm–have more to do with the turnaround than Snyder. Yet even many Republicans in this state would grant that the successful bailout of Chrysler and GM had a lot to do with the turnaround (though Republicans almost universally ignore the energy jobs Obama focused on MI).

So maybe Snyder refuses to deny Obama credit because such a claim would not be credible? It’s not a possibility the NYT article–which is supposed to be a celebration of a lack of ideology–even considers.

Which brings me to the other area where NYT’s idea of what constitutes balance is completely whacked: its treatment of the right to organize.

Read more →

Another Week, Another Bankster with Impunity

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This week, the bankster who will avoid all legal accountability is MF Global and its CEO Jon Corzine. So says the NYT.

While I’m disgusted by that news, I’m not shocked. I’ve grown used to the guarantee that top banksters are immune from all laws.

What I’m interested in is how NYT conveys their news.

First, note what crime they claim MF Global might have committed: fraud. Not theft.

After 10 months of stitching together evidence on the firm’s demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear, according to people involved in the case.

I guess if you said “theft” then you couldn’t suggest the money just disappeared–poof!–rather than got taken to pay off the company’s own obligations.

Plus it’d be a lot harder to accomplish the article’s other main objective, besides reporting yet another Get Out of Jail Free card. While the story seems to have been seeded by people in Preet Bharara’s neighborhood to set the expectation that he would once again fail to bring charges against a bankster, the NYT seems intent on rehabilitating Corzine’s reputation. Consider that they dedicate paragraphs 6 and 7 portraying the tragic plight of a multi-millionaire with a cloud hanging over him.

While the government’s findings would remove the darkest cloud looming over Mr. Corzine — the threat of criminal charges — the former Goldman Sachs chief is not yet in the clear. Read more →

John Brennan Vows to Combat the “Bad Guys” Attacking Our Critical Infrastructure

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John Brennan just gave a speech, purportedly about our policy in Yemen. But it ended up being largely about infrastructure, That’s partly because his speech focused on how, rather than spending 75% of our Yemen funds on bombs, we’re now spending just 50% (having bumped up the total to include an equal amount development assistance). So a good part of his talk focused on whether or not Yemen would be able to do the critical work of rebuilding its infrastructure sufficient to combat AQAP which, in some areas, has done a better job of building infrastructure.

Of course as I noted while he spoke, a number of the infrastructure challenges Brennan confidently assured we could help rebuild–things like access to water–are challenges we are increasingly failing in our own country.

And then, because the DC attention span had had enough of Yemen, moderator Margaret Warner asked Brennan what the Administration will do now that their cybersecurity bills have been defeated. To justify his talk of using Executive Orders to address some of the infrastructure problems, Brennan talked about the “bad guys” who posed a cyberthreat to our critical infrastructure.

Nowhere did Brennan acknowledge the much more immediate threat to our critical infrastructure: in the corporations and politics that let it decline. PG&E and Enbridge, failing to invest the money to fix known defects in their pipelines. Fracking companies, depleting and degrading our water supply. Verizon, eliminating choice for Internet access for rural customers. Republicans who want to gut our Postal Service and passenger rail. And heck, even Fat Al Gore and climate change, which is not only depleting our water supply but stalling key water transport routes.

Brennan promises to help rebuild Yemen’s infrastructure. But not only can’t he implement his plan against the bogeyman “bad buys” threatening our infrastructure, he seems completely unaware that those “bad guys” aren’t anywhere near the biggest threat to our infrastructure.

Don’t get me wrong. I applaud the Administration’s decision to dedicate money to Yemen’s infrastructure, even if I think a 50/50 split, aid to bombs, is still woefully inadequate. But until we begin to see what “bad guys” pose the biggest threat to our own infrastructure, I’m skeptical our efforts in Yemen will be any more successful than they were in Iraq or Afghanistan.

Big US Banks Have Gained Market Share in the Looter Assistance Business

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As I noted earlier, the Tax Justice Network just released a study showing that there is somewhere between $21 and 32$ Trillion that tax cheats have hidden in tax havens. Really obscenely rich people like Mitt Romney make up for $9.8 trillion of that–or about 18% of the total liquid net worth in the world, hidden away in tax havens.

But there are two other tables from the study that bear notice. The study suggests that the money stashed in tax havens has been growing steadily at a rate of 16% a year.

Our analysis finds that at the end of 2010 the Top 50 private banks alone collectively managed more than $12.1 trillion in cross-­‐border invested assets for private clients, including their trusts and foundations. This is up from $5.4 trillion in 2005, representing an average annual growth rate of more than 16%.

But that’s sort of misleading. As the table above makes clear, the amount in tax havens grew by 67% between 2002 and 2004, then grew by 40% in the following two years, then by another 23% in the last year of the bubble. Then it crashed, basically losing that 23% and plateauing for a year. And then it started growing again, 18% between 2009 and 2010. And who knows how much in the last year?

The banksters paid a price for 2 years, but the looting has begun again.

What I find particularly interesting–though I’m not sure what to make of it–is the changing share of looter service the big banks are doing. While UBS’ tax shelter dollars continued to grow, they lost market share among tax cheats. Meanwhile Goldman Sachs’ tax shelter dollars almost quadrupled in that time. Bank of America and Wells Fargo made big gains too (though Morgan Stanley’s tax cheat business shrank and JP Morgan’s was somewhat flat.

Like I said, I don’t know what to make of it. But it sure seems like since the crash at least some of the banks have decided to recover by catering to tax cheats.

Lovely. Some of the same banks that are still in business because tax payers bailed them out are increasingly some of the biggest players in facilitating the looting of our own–and every other–country.

Update: This Title was changed.

Mitt and His Buddies Looted Almost $10 Trillion from Real Economy

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The Tax Justice Network just released an updated version of a report showing how much money gets siphoned out of the real economy into tax shelters: conservatively, $21 Trillion, and possibly as much as $32 Trillion.

I’ll have more to say about what the report says about the how the super wealthy have done in the last decade and which banks have been helping to loot the real economy.

But for now, consider where Mitt Romney fits into this picture. TJN shows that it’s really just the richest of the rich–those 91,186 people who make up the top .001%–that account for the biggest chunk ($9.8 Trillion) of this looting.

Not only is Mitt a member of that tiny club. But his net worth–commonly reported to be $250 Million but, given all the secrecy, possibly much more–puts him well above the mean $183 Million that members of this club enjoy.

And Mitt and his buddies in this very elite club have stashed 18% of the total liquid net worth of the world in places where not only can’t potential presidential voters know about it, but it also remains outside the kind of circulation that would really contribute to real economic growth.

Last week, Obama released an ad that said Mitt is the problem. TJN shows just what a big problem Mitt and his buddies really are.