One Trick Pony

Okay. So, last week I made the following statement: “As I am working in Detroit all week, and am already exhausted by the ordeal, this week’s update will be brief – perhaps more so than it deserves to be.” Turns out, that was a lie. While it may have been less comprehensive than it deserved to be, it was anything but brief. I will attempt to make up for that this week.

Nineteen months after the “official” collapse of the U.S. financial system, Democrats in Congress are FINALLY ready to get serious about preventing another one. Later this week Senate Democrats plan to introduce a financial reform bill to accompany the one passed by the House months ago. And, true to form, Senate Republicans have staked out their uniform opposition. Aside from the typical innate aversion to regulation, the chief opposition to the bill as written, according to Senate Minority Leader Mitch McConnell, is the establishment of a $50 billion fund the Treasury and Federal Reserve would have be able to use in order to break up and wind down any large financial institution that would otherwise fail, thereby protecting the rest of the financial system from the crippling danger of systemic risk. McConnell rounded up every television camera he could find and declared this provision of the bill a guarantee of perpetual taxpayer bailouts of Wall Street. Apparently he hadn’t bothered to read the bill he was railing against. It took his own point man on the finance committee, Republican Senator Bob Corker, to inform him that the $50 billion for the rescue fund would come from the institutions themselves, not the taxpayer, to which McConnell replied – and I paraphrase - “I don’t care about the truth, I’m calling it a bailout dammit!” Fresh off of his special election victory, Senator Scott Brown, heartthrob from Massachusetts declared over the weekend that he was told by “industry leaders” that the Senate bill would cost 30,000 jobs in his state alone. When it was confirmed by the Boston Globe that what “industry leaders” actually told Senator Brown was that 30,000 jobs had been lost in the financial industry in Massachusetts during the recession, Brown responded by saying, “I stand by my numbers, and predict the losses will be worse!” And this incident followed another late last week in which, when asked by a Globe reporter what parts of the bill he objected to, Brown answered, “Well, what parts do you object to? You tell me where the problems are and I’ll put a team together and try to get them fixed.” Face, meet palm.

Unlike with the healthcare debate, the Republicans don’t even seem to be trying this time. Their objections can’t even make it out of the gate before it slams shut on their fingers. Hopefully there is at least one Republican in the Senate capable of understanding that we cannot continue to allow the foxes to watch the hen house. During Senate hearings several months ago the heads of the largest financial agencies in the country pretty much begged Congress to take the crack pipe away from them because they are simply incapable of putting it down on their own. Please tell me there is at least one moderate or conservative compassionate enough to send these clowns to rehab.

In a related story, the SEC charged Goldman Sachs with fraud relating to events leading up to the financial meltdown. According to the complaint, a hedge fund manager named John Paulson selected loans he knew were bad, pooled them into a mortgage-backed security, pooled those into a collateralized debt obligation, sold it off to third parties through Goldman Sachs, then purchased insurance (credit default swaps) on the collateralized debt obligation (CDO) which he knew would fail due to the preponderance of bad loans contained within it. Believe it or not, that’s not the fraud. The alleged fraud is that Goldman acted in bad faith by neglecting to tell the third parties that the man who had built the CDO was also betting it would fail. The foxes, guarding the hen house. For a more comprehensive, enraging – yet entertaining explanation of the Wall Street casino, check out “The Big Short,” by Michael Lewis. And stay tuned for more charges. Goldman Sachs wasn’t the only financial institution involved in these types of transactions.

This afternoon the Supreme Court struck down the federal law prohibiting the depiction of animal torture and cruelty. That’s right, it is once again perfectly legal to produce and distribute videos of dog fighting, cat drowning and women crushing the skulls of mice with their stiletto heels. Writing for the majority, Chief Justice Roberts claimed the law was too broadly written, could be applied to legal activities like hunting, and did not deserve judicial protection because there is no “tradition” in this country of curbing depictions of animal cruelty. Uh huh. I’ll give Roberts the benefit of the doubt on the first point, the law may have been too broadly written. I’m not a lawyer, so I don’t know. But according to the lone dissent of Justice Alito (there’s something you don’t hear every day), the law that was struck down contained exceptions for depictions of legal activities like hunting. What I take exception to is Robert’s claim regarding “tradition.” Prior to 1920 this country had no “tradition” of allowing women to vote. Prior to 1965 this country had no “tradition” of protecting the civil rights of black citizens in the South. Prior to 1977 there was no “tradition” of anyone celebrating my birthday. The absence of a tradition is not some sort of indication of wrongness in the same way that not all traditions deserve to be preserved. The length of time an act has been protected or permitted has no bearing on whether or not said act is right and just.

Finally, (told you this would be short), a 13-year-old Croatian girl slipped into a coma last week, and awoke 24 hours later, speaking fluent German. Conversely, she has been unable to speak a word of Croatian. Her doctors are mystified. How’s that for understatement. The brain is a strange, bizarre, wonderful thing. And it would be nice if we had some idea of how it works.