Team Auto Never Talked to Team Healthcare Reform

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In Steven Rattner’s book, he describes newly elected Barack Obama asking his advisors “Why can’t [the US automakers] make a Corolla?” Implicitly, of course, he was asking “why can’t they make a Corolla in the United States.” His economic advisors, according to Rattner, admitted they didn’t know: “We wish we knew.”

The correct answer to the question would point to a number of things. Executive stupidity would be one important cause. Legacy costs would be another. Market structure and profitability requirements would be another. Weak branding would be another. You could even–pointing to the Ford Focus–argue that one of “them” can make a Corolla, or something reasonably competitive.

But one of the factors that partially explains why American manufacturers can’t make a Corolla would be healthcare costs. (With Toyota’s move of the Corolla-based Matrix production to Canada, you could even argue that Toyota can’t make a Corolla anymore, not here, anyway, even putting aside the quality problems the Corolla has had of late.)

Now, back on the campaign trail, Obama admitted that healthcare is one of the things that makes our companies less competitive. And in his big address to Congress on healthcare on September 9, 2009, Obama even singled out the auto industry as one which our exorbitant healthcare costs made less competitive internationally.

Then there’s the problem of rising costs. We spend one-and-a-half times more per person on health care than any other country, but we aren’t any healthier for it. This is one of the reasons that insurance premiums have gone up three times faster than wages. It’s why so many employers – especially small businesses – are forcing their employees to pay more for insurance, or are dropping their coverage entirely.

It’s why so many aspiring entrepreneurs cannot afford to open a business in the first place, and why American businesses that compete internationally – like our automakers – are at a huge disadvantage.

Which is why I was surprised to see no discussion about healthcare (as opposed to VEBA, the fund the UAW now uses to pay for retiree healthcare) in Rattner’s entire book.

None.

It seemed odd to me that, at a time when our country was rethinking our healthcare system, and at a time when the government was spending a boatload of money to try to make our auto companies competitive again, the teams pursuing those initiatives wouldn’t at least touch base, to test whether healthcare even addressed the problems that contributed to the automakers difficulties.

So I asked Rattner during the book salon.

emptywheel: Aside from a technical discussion of VEBA (for those not familiar, that’s the fund that the Big 2.5 negotiated with the UAW, which the UAW now uses to pay health benefits for retirees, which was a critical issue during negotiations), there was virtually no discussion of health care costs and the way that contributes to profitability (or lack thereof) for car companies that manufacture in the US, as reflected most obviously in Toyota’s repeated decisions to source from Canada because it offers the best mix of highly skilled workers and affordable health care.

Is that in fact right? No one talked about the burden health care costs put on manufacturing in his country during the bailout? I find that particularly shocking given that the bailout took place at the time when all the policy decisions on health care reform took place, and if anything, health care reform will make manufacturing health care costs worse.

Rattner: I wasn’t involved in the broader discussions about health care reform, nor am I a health care expert. We were certainly aware of the burden that health care costs put on the Detroit 3, but the creation of the VEBA’s solved that problem with respect to the retirees.

emptywheel: Right. But in all your coversations [sic] with Geithner and Summers and Rahm, was there honestly never a discussion about health care? No comment about ways the health care reform could have been formulated to contribute to the success of the bailout (and, more importantly, make sure that the effort ended up keeping the jobs that were saved in the US).

Rattner: No. There simply wasn’t time.

I understand the time constraints of all this. Though one of the parts of healthcare reform that will most directly affect the automaker healthcare costs, in a bad way, is the excise tax, and that wasn’t finalized until months after Rattner left government, which left five months for him to remind his buddies in the White House that their plan for healthcare was not going to bring down costs for US manufacturing companies, and it might well make them higher. Furthermore, it seems like an important enough issue–given the investment in both programs–to make time to address this issue.

Then again, I guess the healthcare team was too busy talking to Pharma to make time to talk to manufacturing.

Want to Sue the Banksters? Ask WhereIsTheNote

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Remember WhereIsTheNote?

In the face of mounting evidence that the banks foreclosing on homes did not comply with legal requirements during securitization of mortgages and therefore don’t have legal standing to foreclose, the SEIU and some community organizations teamed together last month to create an online tool that anyone can use to ask their mortgage servicer where their note is. By helping homeowners proactively check whether their bank has the right paperwork, it gives them more power in the event of a foreclosure.

The site launched just over three weeks ago. 200,000 people have visited the website; around 15,000 have used the tool to ask their bank for their note (I’ll have a more exact number shortly).

What has happened since gets very interesting. In the first few days, some banks responded quickly and in apparent good faith, some admitting there was a problem, and others sending what they claimed was the note, but was either something else entirely, or clearly did not meet the requirements for transfer.

But as banks realized those first requests were not isolated requests, two things happened. Either banks have sent back a response saying the homeowner had no right to see their note. Or, banks have not responded at all.

Here’s where things get interesting. The WhereIsTheNote-generated letters invoke the Real Estate Settlement Procedures Act (RESPA). Section 6 of RESPA dictates how loan servicers must reply to consumer complaints about their loan.

Section 6 provides borrowers with important consumer protections relating to the servicing of their loans. Under Section 6 of RESPA, borrowers who have a problem with the servicing of their loan (including escrow account questions), should contact their loan servicer in writing, outlining the nature of their complaint. The servicer must acknowledge the complaint in writing within 20 business days of receipt of the complaint. Within 60 business days the servicer must resolve the complaint by correcting the account or giving a statement of the reasons for its position. Until the complaint is resolved, borrowers should continue to make the servicer’s required payment.

A borrower may bring a private law suit, or a group of borrowers may bring a class action suit, within three years, against a servicer who fails to comply with Section 6’s provisions. Borrowers may obtain actual damages, as well as additional damages if there is a pattern of noncompliance. [my emphasis]

In other words, RESPA says that if homeowners write their servicer and say, “I have a problem with the way you’re servicing my loan,” the law requires that the bank acknowledge that the homeowner has written that letter within in 20 days. And it requires that it resolve that complaint within 60 days. If banks don’t do so, homeowners can sue.

So, as I said, just over three weeks after people started using this site, banks have been writing back and either telling homeowners that the complaint basically saying “I have doubts about whether you actually have legal standing to collect my mortgage payments” doesn’t qualify as a “problem” under RESPA. Here’s how IndyMac made such a claim in one response letter.

Although your fax references the response as RESPA Qualified Written Response eligible, your request actually does not qualify. The statute and case law require that the correspondence disputes the servicing of the loan and requires the sender to provide the servicer specific facts that would enable the servicer to investigate and respond. For instance, a dispute may involve a misapplication of a payment or a miscalculation of a monthly escrow amount. The statement that you are concerned about what you may have heard on the news does not qualify as a dispute with the servicing of your loan. Consequently, we are not subject to the response requirements set forth in the Real Estate Settlement Procedures Act.

In other cases–such as Citibank in my case–the bank appears to have simply let the 20-day deadline pass without a response.

Now, the genius of the WhereIsTheNote campaign is twofold. First, for the first time, someone is collecting an independent set of data about whether banks have a right to collect payment on the loan or not (there is privately available data, but it’s very expensive). WhereIsTheNote has already recognized, for example, that Bank of America and its subsidiaries have adopted a uniform claim that RESPA doesn’t apply in this case (of course, Bank of America is one of the most suspect banks for note problems). And WhereIsTheNote is collecting information that will show that not just those houses in foreclosure, but performing loans have note problems, proving that this is not an issue of “deadbeat” homeowners, but rather banks that are playing fast and loose with private property rights.

But more interesting is enforcement. As the section I cited above makes clear, borrowers whose banks refuse to respond to a RESPA request can sue for damages.

And as it happens, the Attorneys General in all 50 states are already investigating whether the banks are engaging in foreclosure fraud to cover up securitization problems. Which means there are already lawyers out there ready to take on the banks that do things–like refusing to respond to homeowner RESPA requests. WhereIsTheNote will be referring these RESPA non-responses to the AGs to respond accordingly.

If you haven’t already done so, I encourage you to ask your servicer WhereIsTheNote. Because–on a day when all else seems hopeless–it may well be a means of holding the banks accountable for the shitpile they made of our nation.

An Awfully Painful Way to Convince the President Our Economy Is Not Moving

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Remember when Robert Gibbs justified his attack on the professional left by suggesting that they didn’t understand–but the rest of the country did–that Obama had gotten our economy moving again? Remember Recovery Summer, Obama’s effort to convince Americans that the economy had turned around? Well, we’ve already seen that voters don’t take their understanding of our economic state from the same wonky metrics the White House does.

You think the White House is beginning to understand that no matter how many times you repeat the news that the economy is good, voters know better?

Six in 10 voters named the economy as the nation’s No.1 problem. Roughly four in 10 said their family’s financial condition has worsened under Obama. About six in 10 said the country is on the wrong track.

I assume yesterday’s defeat is the kind of metric that will finally make it clear to the White House that the economy sucks and people are pissed about it.

Citi’s Fear

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I wanted to return to a detail I mentioned in yesterday’s book salon. As I noted, in his book on the auto bailout, Steven Rattner described Citi as being worried during the Chrysler negotiations that retail customers would retaliate if Citi played hard ball.

Bankers for Goldman and Citi had advised [JP Morgan Chase VP and the Chrysler bondholder’s lead negotiator] Jimmy Lee to make the best of a bad situation. Privately they felt his brinksmanship was embarrassing and potentially costly. Citi especially wanted to avoid a liquidation. Its analysis showed it would recover no more than 20 cents on the dollar in that instance. Citi also feared losing business in its branches in states like Michigan and Ohio where consumers might blame it for Chrysler’s demise. (173)

That didn’t make sense to me given that Citi doesn’t have branches in MI and OH; the closest actual branches are in Chicago. Compare that to Chase, which just took over from Comerica as the biggest bank in MI by deposits and was presumably second at the time of the bailout negotiations. Citi should only fear retaliation from consumers elsewhere, in those urban areas that actually have Citi branches, or they should fear retaliation some other way, presumably through their credit card business. I asked Rattner why Citi was worried, but JP Morgan Chase was not, given its much greater involvement in the auto states. He responded, “Yes, they were definitely worried.”

Frankly, I don’t know what to make of this. Given the context of the claim–in which Goldman and Citi are portrayed as talking Jimmy Lee down from a hardass negotiating position–JPMC appears not to have been sufficiently worried to change its behavior. And the Citi claim doesn’t make sense on its face. Perhaps Citi was worried about something else. Perhaps they were just more worried because they were insolvent? There are a few details he pretty clearly got wrong in his book (such as his claim that Nissan’s consideration of a deal with Chrysler was secret), but this seems instead like one of the abundant examples of where Rattner is an unreliable narrator. Rattner chose to portray Citi as worried (and quickly agree the hard-bargaining JPMC was, too), but it’s unclear whether that was really true or just nice spin on the banks.

What Rattner probably didn’t know was that FDL was trying to increase this worry at the time by encouraging people to take their money out of Chase. That was a mostly unsuccessful effort (let me tell you, Chrysler is  no more popular in this country than the big banks) to target the banksters for actions that hurt the communities they’re in.

As unsuccessful as our effort was in terms of numbers, if Rattner-the-unreliable-narrator’s claim has any basis in fact, then our effort to pressure JPMC to behave better worked. Sort of.

Since then, Arianna’s Move Your Money campaign has more successfully advocated for people and institutions to move their money out of the big banks. By April, they claimed $5 billion had been moved. And it does seem like some of the banks are losing market share to smaller banks.

The largest banks in Michigan are losing market share and Chase Bank now has the most deposits in the state, according to new data released Thursday by the Federal Deposit Insurance Corp.

As of June 30, the five biggest banks in Michigan — Chase Bank, Comerica Bank, PNC Bank, Bank of America and Fifth Third Bank — accounted for 55% of all deposits in the state. That’s down from 57.3% on June 30, 2009.

I raise all this because of another interesting discussion about whether consumer action might more effectively target the banks. Via Yves Smith, I found this Playboy article on Edmundo Braverman’s WallStreetOasis.com’s proposal on How to Destroy a Bank (Yup, it appears you have to have a pierced navel and no pubic hair to be a Playboy model these days).

This article set forth a plan for how consumers could destroy one of America’s four largest banks. Customers would deliver a series of escalating threats against Wells Fargo, Bank of America, JPMorgan Chase and Citibank, demanding policy changes. The threats would culminate in a series of flash-mob bank runs that targeted one of the banks.

In a comment in Yves thread, Braverman acknowledged his idea was a thought exercise to take Move Your Money the next step.

The whole thing was inspired by Arianna Huffington’s “Move Your Money” idea. I thought it was a good idea, but not one that would be dramatic enough to produce any changes in the way the banks did business. So I asked myself, “What would have an impact on the banks?” and that’s when I came up with the Tank-A-Bank plan.

It was always just a thought exercise, and never something I advocated.

Yves seems to be thinking more about this; what can consumers do that won’t get them jailed as terrorists but will get us to a point where the finance industry isn’t dragging our country down even while stealing our money in the process?

Read more →

FDL Book Salon Welcomes Steven Rattner, Author of Overhaul

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I come to Steven Rattner’s Overhaul: An Insider’s Account of the Obama Administration’s Emergency Rescue of the Auto Industry from a very particular perspective. As a Michigander whose husband still works in the auto industry and whose town has benefited from battery subsidies, I’m a grateful direct beneficiary of the work the Obama Administration did to save the auto industry. But that also means I read this book, which might have been subtitled, “Wall Street gapes at Detroit” from the perspective, “Detroit gapes back at Wall Street.”

The Key to the Bailout: Section 363

There are key parts of the story I was eager to read, particularly the inside details on how Team Auto brought GM and Chrysler through bankruptcy in such short time. The decision–which Rattner traces to a suggestion he made in December 2008–to use Section 363 of the bankruptcy code is what made the whole bailout work. It allowed Team Auto to move the viable parts of Chrysler and GM into new companies, leaving much of the debt and underperforming parts of the companies (like Saturn or Pontiac) behind. As Rattner describes, preparing for 363 took a lot of negotiations with stakeholders–notably the UAW and bondholders–ahead of the actual bankruptcy filings to bring the time they’d spend in BK down from the 6 to 15 months originally projected, to the month or two it ultimately took. Much of the book’s narrative is about the deal-making Rattner himself led. Some interesting details of that deal-making: that Tim Geithner instructed Rattner not to make any special demands of TARP recipients who were also Chrysler bondholders, that Citi feared consumers would take their branch banking in MI and OH elsewhere if it played hardball, and that JPMorgan Chase’s chief negotiator Jimmy Lee,

demanded to know why, if the government thought banks important enough to give them tens of billions in TARP money, it wanted to squeeze them on [the Chrysler] deal.

In additional to this central drama, Rattner provides worthwhile details of what he learned over the course of this intervention. Some of these are details widely known in car country, but dismissed by much of the rest of the country: that GM had closed most of the gap in labor costs with transplants by the beginning of the restructuring, that GM plants really were competitive in terms of productivity, and that trimming the number of dealers was crucial to the success of the restructured companies. Rattner also added to my understanding of why GM needed help: he described the sheer ineptitude of GM CFO Ray Young and what Rattner describes as the ineffectiveness of GM’s chief lobbyist.  And the last chapter, in which Rattner provides a partial explanation for the quick departure of Ed Whitacre, answers some, but not all, of my questions about the transition from GM CEO to CEO over the last two years.

One Missing Detail: Cerberus’ Role

One part of the story I wish Rattner had told more fully is the role of Cerberus in the bailout. There were a number of questions about Cerberus’ role in the initial negotiations with the Bush White House, particularly since that initial loan underfunded Chrysler in comparison to GM. But Rattner tells a story that is very favorable to Cerberus. For example, he rather amusingly attributes Cerberus’ offer–in December 2008–to just hand over Chrysler to the government for a dollar, to patriotism. Rattner makes that claim by neglecting any mention of Cerberus’ own desperate straits at the time. He doesn’t mention, for instance, that Cerberus had limited withdrawals from some funds, citing a desire for liquidity and invoking a “‘perfect storm’ in the auto and housing sectors.” And it’s over a hundred pages after his description of that December 2008 offer before he mentions GMAC’s successful effort to gain bank status and receive TARP funds, a move approved in that same December period and which has been an area of TARP that has come in for particularly sharp criticism. It turns out that private equity guy Steven Rattner tells a story that focuses primarily on the incompetence of manufacturing companies, even though private equity fund Cerberus’ failures and demands for a free ride were very much a part of the story of the auto bailout.

And these areas, where Rattner’s Wall Street perspective displays his own biases, are as interesting as the details about the bailout.

The Cost and Benefits of an Outsider

Take Rattner’s inconsistency over whether appointees overseeing industries should have any expertise in those industries. On page 48, Rattner repeats his complaint about politicians (in this case Debbie Stabenow and Carl Levin) questioning his qualifications for the job. But then, on the very next page, he endorses a view that the Treasury Secretary had to be someone with credibility in the financial world, precisely the equivalent of what Stabenow and Levin were asking for the Auto Czar position.

Essentially, only Larry and Tim had the necessary government experience, along with the credibility vital in the financial world.

This unquestioning endorsement of an insider for the finance world is shortly followed, on page 52, by one of the details that shocked me the most in the book: the report that neither Rattner, nor Geithner, nor Summers were cognizant of the degree to which the auto slowdown would affect (and was already affecting) the suppliers.

Automotive suppliers started to fail, which was how I discovered that the scope of my assignment was much broader than I’d anticipated. GM and Chrysler had dominated the conversations with Tim and Larry. None of us appreciated that, with auto sales down 40 percent, the collateral damage among related businesses would be vast.

Now, the stress the suppliers were (and are) under was a known fact to anyone with a basic understanding of the industry. The Center for Automotive Research (a group Rattner later relied on for industry analysis) produced a widely-cited report on the economic consequences of an auto collapse in November 2008, which projected the dire impact on suppliers in case of an auto contraction. And reports explaining Toyota’s support for a bailout covered the supplier issues as well. Yet, even as an inexperienced Rattner was learning this well-known fact on the job, thousands of supplier employees were already losing their jobs. (Rattner describes a similar rather belated discovery–how the financial collapse had dramatically hurt the auto finance companies, and with them the debt-driven market they supported–on page 145.)

Mind you, Rattner makes a good case in this book for bringing in outsiders to restructure any industry the government bails out, even while the evidence he presents, with this story and a few others like it, hint at the costs of having no one with expertise involved.

Which brings me to the question I’ll end this post with. So, to Steven: You suggest that the unhappiness with the bank bailouts has to do with the absence of the same shared sacrifice the auto bailout demanded. But that’s only half of it: The big problem is that finance is still broken, it’s still dragging the rest of the country down. Putting the question of firing CEOs aside, how did the Obama Administration insist on a complete overhaul for one industry, but status quo for the other? And what could be done, particularly as we learn more about the foreclosure fraud engaged in by top TARP recipients, to undertake the kind of overhaul that has served the auto industry so well?  (Note, Rattner does address some of this in the book. He provides several–to me, unconvincing–explanations for the disparate treatment of the bankers and the auto makers–see pages 115, 216–and states he would have fired the bank CEOs that needed government help.)

Nobody Can Move for a New Job

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Well, apparently just 6.9% can and did.

Just 6.9 percent of job seekers who found employment in the third quarter relocated for the new position. That was down from a relocation rate of 13.4 percent in the same quarter a year ago, according to the latest Challenger Job Market Index, a quarterly survey conducted by global outplacement consultancy Challenger, Gray & Christmas, Inc. among approximately 3,000 successful job seekers from a wide range of industries nationwide.

The relocation rate has been low for four consecutive quarters, averaging just 7.3 percent since the fourth quarter of 2009. The 6.9 percent figure in the quarter ending September 30 was the lowest ever recorded by the firm, which began its tracking in 1986.

“Continued weakness in the housing market is undoubtedly the biggest factor suppressing relocation. Job seekers who own a home – even if they are open to relocating for a new job – are basically stuck where they are if they are unable or unwilling to sell their homes without incurring a significant loss,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

This is a problem. It means that people in FL are going to be screwed until such time as its economy get fixed, because they’re not going to be able to leave. (In the case of AZ, CA, and NV, I would hope that people getting a new job would just walk away.

Yet another reason why simply blaming deadbeats for the foreclosure problem gets us deeper and deeper into an economic hole.

“We’ve never lost complete command and control and functionality of 50 ICBMs”

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Only, as of this weekend, we have completely lost command and control of a whole bunch of ICBMs.

President Obama was briefed this morning on a power failure at F.E. Warren Air Force Base in Wyoming that took 50 nuclear intercontinental ballistic missiles (ICBMs), one-ninth of the U.S. missile stockpile, temporarily offline on Saturday.

[snip]

On Saturday morning, according to people briefed on what happened, a squadron of ICBMs suddenly dropped down into what’s known as “LF Down” status, meaning that the missileers in their bunkers could no longer communicate with the missiles themselves. LF Down status also means that various security protocols built into the missile delivery system, like intrusion alarms and warhead separation alarms, were offline.

[snip]

“We’ve never had something as big as this happen,” a military officer who was briefed on the incident said. Occasionally, one or two might blink out, the officer said, and several warheads  are routinely out of service for maintenance. At an extreme, “[w]e can deal with maybe 5, 6, or 7 at a time, but we’ve never lost complete command and control and functionality of 50 ICBMs.”

Now, Ambinder quotes a number of sources effectively saying “nothing to see here, there was never a risk.”

But the fact that they appear to have no fucking clue how they lost control of one ninth of our nuclear arsenal leaves me a little skeptical of their reassurances.

The cause of the failure remains unknown, although it is suspected to be a breach of underground cables deep beneath the base, according to a senior military official.

It is next to impossible for these systems to be hacked, so the military does not believe the incident was caused by malicious actors. A half dozen individual silos were affected by Saturday’s failure.

After StuxNet, are we so sure the hackers to pull this off aren’t out there? And the failure of a bunch of cables … well, that reminds me of the failure of a bunch of other cables.

Alternately, given the accelerating speed with which we’re turning into a banana republic, maybe it’s just possible that we can’t keep our critical infrastructure safe from our own increasing incompetence anymore.

I can sympathize. For about  a year I’ve been debating getting a chest freezer, but thus far have not, because I suspect I would lose power so often so as to make the freezer a collection of inedible meat. Perhaps now the government is considering whether it has the infrastructure to keep 450 ICBMs lying around?

Update: Danger Room has more.

One Reason We Don’t Hear about Income Inequality: Media Execs Among the Richest

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David Cay Johnston has a must-read piece on what the most recent payroll tax data shows about growing income inequality.  He shows that total wages have fallen 5% since 2007, largely because so many fewer people are making any income.

Every 34th wage earner in America in 2008 went all of 2009 without earning a single dollar, new data from the Social Security Administration show. Total wages, median wages, and average wages all declined, but at the very top, salaries grew more than fivefold.

[snip]

Measured in 2009 dollars, total wages fell to just above $5.9 trillion, down $215 billion from the previous year. Compared with 2007, when the economy peaked, total wages were down $313 billion or 5 percent in real terms.

The number of Americans with any wages in 2009 fell by more than 4.5 million compared with the previous year. Because the population grew by about 1 percent, the number of idle hands and minds grew by 6 million.

He also notes how the very rich are getting very richer.

The number of Americans making $50 million or more, the top income category in the data, fell from 131 in 2008 to 74 last year. But that’s only part of the story.

The average wage in this top category increased from $91.2 million in 2008 to an astonishing $518.8 million in 2009. That’s nearly $10 million in weekly pay!

[snip]

In the Great Recession year of 2009 (officially just the first half of the year), the average pay of the very highest-income Americans was more than five times their average wages and bonuses in 2008. And even though their numbers shrank by 43 percent, this group’s total compensation was 3.2 times larger in 2009 than in 2008, accounting for 0.6 percent of all pay. These 74 people made as much as the 19 million lowest-paid people in America, who constitute one in every eight workers.

At the same time, he notes that this story–which should have been told after the numbers were released on October 15–went unmentioned.

Not a single news organization reported this data when it was released October 15, searches of Google and the Nexis databases show. Nor did any blog, so the citizen journalists and professional economists did no better than the newsroom pros in reporting this basic information about our economy.

Now, Johnston doesn’t provide a list of who those 74 people are that make as much as the 19 million lowest paid Americans. But for shits and giggles, I wanted to see who Fortune–which loves to idolize these people–lists. Mind you, they’re clearly measuring different things, because Fortune’s numbers are smaller than the payroll tax numbers (presumably, this excludes a bunch of executives of privately held companies). But take a look at what industries are dominating Fortune’s best-paid men, plus the two women whose salaries match those of the men in the top 25.

  1. Greg Maffei, Liberty Media, $87.5 million
  2. Lawrence Ellison, Oracle, $70.1 million
  3. Fred Hassan, Merck, $49.7 million
  4. Carol Bartz, Yahoo, $47.2 million
  5. Mario Gabelli, GAMCO Investors, 43.6 million
  6. Mel Karmazin, Sirius, $43.5 million
  7. Leslie Moonves, CBS, $43 million
  8. Safra Catz, Oracle, $36.4 million
  9. Michael Jeffries, Abercrombie & Fitch, $36.3 million
  10. Robert Bertolini, Merck, $35.1, million
  11. Marc Casper, Thermo Fisher Scientific, 34.1 million
  12. Philippe Dauman, Viacom, $34.0 million
  13. John Hammergren, McKesson, $33.9 million
  14. J. Raymond Elliott, Boston Scientific, $33.4 million
  15. Ray Irani, Occidental Petroleum, $31.4 million
  16. Stephen Burke, Comcast, $31 million
  17. Charles Phillip Jr., Oracle, $30.1 million
  18. Glen Senk, Urban Outfitters, $29.9 million
  19. Thomas Montag, Bank of America, $29.9 million
  20. Dennis Strigl, Verizon, $29.0
  21. Thomas Kurian, Oracle, $28.5 million
  22. Ralph Lauren, Polo Ralph Lauren, $27.7 million
  23. Thomas E. Dooley, Viacom, $27.0 million
  24. Thomas M. Rutledge, Cablevision, $26.0 million
  25. Raymond Plank, Apache, $25.8 million
  26. Daniel H. Mudd, Fortress Investment Group, $25.7 million
  27. Timothy Armstrong, AOL, $25.6 million

Now, obviously, this is not an apples to apples comparison to the 74 richest people Johnston is talking about. Indeed, it’s not even clear how many of these, calculated using payroll tax data, would be in Johnston’s group; perhaps only Maffei and Ellison would be (Fortune’s list of top CEO compensation is another list, though only 8 of them make more than Johnston’s $50 million threshold; that list is dominated much more by energy and medical companies). So these are really a snapshot of the paupers among the richest of the rich.

But it provides a list of who the top paid executives in public companies were in 2009.

And 10 of the 27 top paid executives, according to Fortune, were in media.

There’s a reason why no one is telling the story of America’s increasing income inequality. That’s because the people telling the story work for some of the people most benefiting from it.

Debbie Stabenow v. Ben Nelson; Cherry Orchards v. Con Agra

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This could be an interesting, beneficial outcome of this year’s election: Debbie Stabenow ascending to Chair the Agriculture Committee.

As of his last calculation, Nate Silver gives the Democrats an 84% chance of keeping the Senate. But they’ll keep it without Blanche Lincoln, whom Nate gives a 100% chance of losing to John Boozman. And that’ll open up the Chairmanship on Ag.

The Politico reports that, in spite of the fact that four people have more seniority on the committee, Stabenow stands a decent chance of getting the post, though Bad Nelson might demand it as his reward for staying in the caucus.

Michigan’s Debbie Stabenow is seen as the front-runner to replace Lincoln, but that’s not a given. Nebraska moderate Ben Nelson might win the post as a consolation prize for staying in the Democratic Party, or Kent Conrad of North Dakota could abandon his budget chairmanship to take the helm.

[snip]

“Everybody in town seems to think that she is most likely going to be the next chairman,” said one lobbyist who tracks the committee.

Sources close to the panel say the Michigan Democrat is well-liked by her colleagues and earned their respect during the last round of farm bill negotiations by bridging the interests of states with commodity crops and those with specialty fruit and vegetables.

But because Michigan isn’t your typical Big Ag state, some observers say Stabenow might face opposition from powerful industry lobbies. “There would probably be fear among some of the industry leaders of the cotton people and the wheat people and the barley people if they saw Stabenow take the helm,” said an industry source close to the committee.

Now, Stabenow isn’t always the most hardnosed leader. And on occasions (notably, the bankruptcy bill) she has put corporate interests ahead of her constituents.

But as the Politico article suggests, she would make a very interesting Ag Chair because of the nature of our Ag industry in MI. That’s because MI’s Ag industry has a diversity second only to CA, but (because of the scale) much less dominated by big players. Here’s a snapshot:

  • Michigan is the national leader in the production of tart cherries, having grown 196 million pounds or 77% of the U.S. total in 2007.
  • Michigan also ranks first nationally for the production of pickling cucumbers, geraniums, petunias, squash and vegetable-type bedding plants.
  • Michigan ranks 3rd in the nation in apple production with over 770 million bushels produced in 2007. The estimated farm-level value was $97.1 million.
  • Michigan is 2nd nationally for beans, carrots, celery, plums and 3rd in asparagus production.
  • Over 887,560 tons of fresh market and processing vegetables were grown in Michigan in 2007. The state ranks 8th in fresh market and 5th in processed vegetable production nationally.
  • Michigan ranks 3rd nationally in value of wholesale sales of floriculture products.
  • In 2007, Michigan led the nation in the value of sales for 13 crops, including: Potted Easter Lilies, Potted Spring Flowering Bulbs, Potted Geraniums (seed), Potted Petunias, Potted New Guinea Impatiens, New Guinea Impatiens Hanging Baskets, Geraniums, Impatiens, Begonia and Petunia Hanging Baskets, Impatiens and New Guinea Impatiens (flats) and Potted Geraniums (cuttings).
  • About 335,000 dairy cows produced 7,598 million pounds of milk in 2007. Michigan ranks 7th nationally for milk production
  • Michigan’s hog production totaled 556 million pounds in 2007. Michigan ranks fourteenth in the

    nation in terms of inventory.

  • There were over 1 million head of cattle in the state in 2007 with an estimated value of $1.42 billion.

(Somehow, that list neglected to mention blueberries, where we also lead the nation). MI farms are, on average, smaller than the national average, though they are more profitable per acre. There’s a very healthy farmers market culture here, and also some proactive efforts to develop locally-branded processed food from our harvest, such as the soy processing plant 10 miles from here that offers a non-GMO soy oil. Our local big grocery chains do a pretty good job of promoting locally produced products.

And then there’s Tony the Tiger, which is about as Big Ag culture as we get.

In other words, if Stabenow gets the Chair it’ll put someone who is not beholden to Big Ag the way the Ag Chairmen typically are. At a time when the local Ag movement is picking up steam, we might have someone whose constituency would support such an effort.

Compare that with the most likely alternative: Ben Nelson. Who represents, among other corporations, Con Agra. As big as Big Ag gets.

Mind you, the decision may be made by the margin with which the Democrats keep the Senate. If we keep it by just two votes, I imagine we’ll see Con Agra continue to rule. But if we can eke out a few more seats, it’ll give Bad Nelson much less leverage to demand this Chairmanship.

(Cherry Orchard image by jsorbieus)

America Is a Beautiful Place, Unaccountable Elite Edition

/in /by

It says something about our country that the person who wrote this op-ed could, in a few short years, go on to serve as the primary economic advisor to the President. (h/t scribe)

And this study shows that measured this way, the mortgage market has become more perfect, not more irresponsible. People tend to make good decisions about their own economic prospects. As Professor Rosen said in an interview, “Our findings suggest that people make sensible housing decisions in that the size of house they buy today relates to their future income, not just their current income and that the innovations in mortgages over 30 years gave many people the opportunity to own a home that they would not have otherwise had, just because they didn’t have enough assets in the bank at the moment they needed the house.”

[snip]

For be it ever so humble, there really is no place like home, even if it does come with a balloon payment mortgage.