Turning the Clock Back

GOP House Guts Dodd-Frank Financial Regulations, Inviting Next Financial Disaster

Interview with Morris Pearl, chairman of Patriotic Millionaires and former managing director at BlackRock, conducted by Scott Harris

The Republican-controlled House of Representatives passed the so-called, Financial CHOICE Act on June 8,which would gut the 2010 Dodd-Frank banking regulation law by a party line vote of 233 to 186. The overall objective of the GOP bill is to eliminate much of the oversight of the nation’s banks that was imposed after the 2008 financial meltdown, the worst economic crisis in the U.S. since the Great Depression.

Despite Trump administration and Republican party claims that the Dodd-Frank regulations have hobbled U.S. banks, Wall Street and banks large and small across the nation have been healthy and profitable since the passage of Dodd-Frank. If approved by the U.S. Senate, the legislation would remove rules to prevent risky investment strategies that could trigger another banking crisis, weaken protections for mortgage borrowers and military veterans, and restrict predatory lenders. The bill would also erode the enforcement power of the Consumer Financial Protection Bureau established in 2011.

Between The Lines’ Scott Harris spoke with Morris Pearl, chairman of Patriotic Millionaires, who is a former managing director at BlackRock, Inc., one of the largest investment firms in the world. Here, Pearl explains why he believes the GOP vote to severely weaken the Dodd-Frank banking regulations law is courting disaster. [Rush transcript]
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MORRIS PEARL: We had a huge financial crisis starting in 2008, the year before Obama took over as president. That was caused in part, by a lot of things, but in part by really reckless behavior of some of the bank executives. Now, the Republican Congress is trying to convince America it was caused by the Dodd-Frank Act that was signed in July of 2010, that somehow that’s the reason why small businesses had trouble getting bank loans in that time, even though it was about two years later that the Dodd-Frank Act was signed. So we think it’s just ridiculous. They want to kind of turn back the clock. We go through cycles of sort of the banks having lots of power and the government regulators getting more power. Now the Congress, the Republican-ruled Congress, says they will have to turn the clock back, since the government regulators, the representative of the people have too much power. And we need to get more power to the banks and the bank executives who run those banks. And I just think that’s wrong.

You know, we were not in the right place before that was passed prior to 2010. We had a huge crisis and we brought in some new laws, rules and regulations to prevent another crisis like that, to prevent some of the problems, and the Republican Congress says “No, that’s a bad idea” and they want to undo all that.

It’s just wrong, it’s wrong for America. It’s wrong for small businesses, for investors. And in particular, it’s wrong for most banks. It’s not going to help the banks to turn that back. The United States and New York, where I live is the financial capital of the world because of our strong regulatory infrastructure. Because our government regulators give people all over the world confidence to send their money to invest in America. And if we want to be less regulated, well, there’s lots of countries of less regulation. You could send your money to lots of countries if you wanted an unregulated financial system. That’s not the way it’s going succeed for America.

BETWEEN THE LINES: Morris, just a final question here. If the Senate does pass some of these key House provisions in this legislation and critical parts of the Dodd-Frank bill are removed or eroded, what is the jeopardy the nation faces overall? Are we going to see a return to credit default swaps and derivatives that were abused by so many on Wall Street that in part triggered the financial crisis that we saw hit the country and the world in 2008?

MORRIS PEARL: I don’t know if we’re going to see the exact same problem again. Probably not. The people who – there are still people that remember 2008, it’s only nine years. What we’ll see is the executives who run the banks going back to the attitude that well, if I make a lot of money, if could do something really risky it might win and it might lose. Like if you bet on black at a roulette table, you might win, you might lose. Well, if I win, I’ll make a huge amount of money and be able to retire and support my family and bless my wife for not having to work anymore. And if I lose, well, I’ll lose my job and I’ll get another job. And the taxpayers will be stuck with it. That’s what we’re going back to, and I don’t think that’s good. I mean, that’s wrong. It has this huge agency problem, because the Federal Deposit Insurance Corporation, which is part of the government, guarantees the deposits of the depositers and if the banks are allowed to take more risks that really means that government is sort of guaranteeing your deposits. You don’t worry about what the bank does when you make a deposit in your checking account. You don’t do research on how the bank invests the money or how they make loans. You don’t need to because we’ve got an FDIC which guarantees your deposits. So there’s no invisible end of the marketplace – “Oh, people won’t deposit money in risky banks.” Well, they will if the risky bank offers slightly higher interest rates. And so it’s a “well, head, I win; tails, somebody else loses” for these actual people that work in the bank. And that’s not good. We will have another crisis. It won’t be the exact same thing again; it will be a different kind of crisis. But, we will have another crisis, eventually.

For more information, visit Patriotic Millionaires at patrioticmillionaires.org.

Climate Alliance Tells World: Trump Doesn’t Speak for U.S. on Climate Change

Interview with Alden Meyer, director of strategy and policy with the Union of Concerned Scientists, conducted by Melinda Tuhus

Donald Trump’s June 1 announcement that his administration is withdrawing the U.S. from the Paris Climate Accord has prompted more coverage in the corporate media of the climate crisis than that of several preceding years. Because the Paris agreement stipulates that any signatory nation must wait three years before finalizing its withdrawal, the first day the U.S. can officially withdraw is Nov. 5, 2020, one day after the next U.S. presidential election. However, Trump announced that his administration would do nothing to fulfill previous climate pledges made by President Obama, so it’s not clear how much difference it makes whether the U.S. is officially inside or outside of the voluntary pact, to which all but two other nations in the world agreed.

But a move the same day as Trump’s announcement could offset the effect of policy changes at the federal level to reduce climate pollution. On June 1, the governors of California, New York and Washington state announced the formation of the U.S. Climate Alliance, pledging to uphold the objectives of the Paris Agreement by reducing carbon emissions 26 to 28 percent, compared with 2005 levels by the year 2025. Within a few days, the bipartisan group attracted nine other states and Puerto Rico to join. Later, ten other U.S. governors, the mayor of Washington, D.C. and hundreds of other mayors of U.S. cities declared they would work toward the same goals, without officially joining the Alliance.

Together, the members and supporters of the alliance represent 57 percent of the U.S. population, and contributes 40 percent of the country’s greenhouse gas emissions. Between The Lines’ Melinda Tuhus spoke with Alden Meyer, director of strategy and policy with the Union of Concerned Scientists, who has worked on climate issues for decades. Here, he explains how the Climate Alliance can exert influence on local and national policy outcomes on climate change. [Rush transcript]
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ALDEN MEYER: The U.S. Climate Alliance, which is a state mechanism along with more than 1,200 mayors, businesses, investors and college and university professors, have announced that they are still in the Paris agreement and they will do their utmost to meet the U.S. commitments under Paris. This is a remarkable development. It’s obviously greatly welcomed by countries around the world. Just yesterday the prime minister of Fiji, who is the incoming president of the Conference of the Parties to the framework agreement, named Gov. Jerry Brown of California as his special envoy for state and regional action, and Gov. Brown, along with Gov. Inslee of Washington state and Gov. Kate Brown of Oregon all announced they’ll be going to the next climate summit meeting in Bonn, Germany, in November. Mayor Bloomberg has been very actively working with representatives of cities and mayors around the country on this issue. And so there’s no doubt that there’s been a sharp reaction to President Trump’s announcement of withdrawing the U.S. from Paris, and these mayors and governors and business leaders and others are trying to make clear that President Trump does not speak for America on this issue and that there’s tremendous support for the Paris agreement, for climate action, for the clean energy revolution and all the jobs and economic prosperity that can bring, and they will be taking this message that we are still in to the rest of the world.

BETWEEN THE LINES: Are there things that are going to make it harder or even impossible for states and cities to do what they want to do?

ALDEN MEYER: Well, there’s two issues here. One is, can the federal government get in the way of state action or local action to reduce emissions? In certain areas it can. For example, California has the right under the Clean Air Act to set stronger standards for vehicle emissions than the federal government. They have a waiver from the Environmental Protection Agency to exercise that authority. That’s one of the concerns California has, that the Trump administration may try to withdraw that waiver and that would lead to a court fight. The other issue is, who represents the U.S. at these negotiations? Clearly, the states and the cities and the business leaders do not formally represent the U.S.A., – they can’t formally take positions on behalf of the U.S. or negotiate with other countries, but they can send a very important political signal that major elements of U.S. society remain committed to Paris. They will do their best to make sure we meet the emissions reduction commitments we agreed to under the agreement, and that President Trump and his administration represent a short-term aberration in U.S. climate policy and not a long-term trend and that after he leaves office, hopefully, the next president will return to the negotiations and the U.S. will be back in formally as a country.

BETWEEN THE LINES: Are you optimistic about the world’s ability to address the climate crisis before it’s totally too late?

ALDEN MEYER: Well, this is a trend that’s been building steam over many years now, and we expect to see more cities and states and businesses join this loose coalition because these officials recognize that climate change is already having impacts on their communities, on their budgets, on their infrastructure and unless we address the climate crisis, those impacts are only going to get worse. They also understand that the clean energy economy, which is one of the main solutions to climate change, offers tremendous economic development and employment benefits to those who show leadership, which is one of the reasons you’ve seen both Democratic and Republican governors and legislatures, over the last decade or so, adopt renewable standards for their utilities, requiring a larger share of electricity generation to come from renewable sources, and these standards are very popular, including in Republican states, because they bring economic employment and tax benefits to local communities.

So this is a trend we’ve seen building for awhile. I think what President Trump did with his announcement of withdrawal from Paris is galvanize it to come together in a more public and unified way to present a united front that the U.S. is still in as a country, as a society, no matter what the current president says. So that’s welcome. But this trend will continue; it will build, and I think it will be clear to the rest of the world that the U.S. as a whole is still very committed to climate action even if our president isn’t.

For more information, visit Union of Concerned Scientists at ucsusa.org.

Michigan State Officials Face Manslaughter Charges in Flint Water Crisis Deaths

Interview with Melissa Mays, water crisis activist and founder of the Flint-based group Water You Fighting For, conducted by Scott Harris

The water crisis in Flint Michigan continues with thousands of residents still forced to use bottled water for drinking, cooking and cleaning. Flint’s crisis began in 2014 when an unelected city manager appointed by the governor attempted to save money by changing the town’s water source from Lake Huron to the Flint River, triggering lead contamination that endangered the health of the entire population, particularly children.

Now after years of frustration, uncertainty and protest, the city’s residents were surprised and pleased to hear that Michigan’s Attorney General Bill Schuette had charged five city and state officials with involuntary manslaughter for a death resulting from the Flint water crisis. The officials, including the state’s Health and Human Services Director Nick Lyon, are accused of failing to notify and lack of action to stop the outbreak of Legionnaires’ disease, allowing the outbreak to continue spreading through Flint’s water system. At least 12 residents of Flint died of Legionnaires’ disease with 90 others sickened in two waves of the outbreak in 2015.

Despite the allegations of criminal wrongdoing brought against these state officials, Michigan’s Republican Gov. Rick Snyder has expressed his full support for them and has kept them in their jobs. Between The Lines’ Scott Harris spoke with Melissa Mays, a water crisis activist and founder of the Flint-based group Water You Are Fighting For. Here, she discusses the current status of Flint’s water contamination crisis and the recent charges filed against city and state officials.
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MELISSA MAYS: January of 2015, we received a letter at our house that said for the previous nine months, our water had been contaminated with a cancer-causing byproduct. And we realized that the false you know, “It’s going to be OK, all the statements that the state and city had made were untrue. And so, my husband and I came up with, “What are You Fighting For?” to be a portal of accurate information. And so started testing the water and researching to find out what we were being exposed to and who was doing this to us. And along the way, we discovered lead, bacteria. People were dying. We worked with legislature. We have worked to change the laws not just in Michigan, but in the entire country because this isn’t just happening to Flint. But unfortunately, today is Day 1,150 since we have had clean and safe water. So we’ve been fighting for health care for Flint residents, to have all the damaged pipes replaced in our homes, in the streets, and the service lines, and for the people to be held accountable who did this to us – because these were choices that were made.

BETWEEN THE LINES: Well, accountability is certainly in the news this past week. Five Michigan state officials, including some who report directly to Michigan Gov. Mitch Snyder, have recently been been charged with involuntary manslaughter in connection to an outbreak of Legionnaire’s disease that’s linked with the Flint water crisis. That outbreak of Legionnaire’s killed a dozen people in Flint during the contamination crisis. Tell us our listeners a bit about the context for understanding these charges that have been leveled against these officials by Michigan’s state attorney general.

MELISSA MAYS: Well, typically for a year, there’s 78 deaths from Legionnaire’s in the entire country. We had 12 in just a year-and-a-half period. The unfortunate part is these people knew about it. We had people in the Health Department, we had people who were working for the county and the state that their one job was to protect the public health and to let us know if things changed, like an outbreak of a bacteria – something that people could protect themselves from, because you basically inhale the bacteria in the droplets in the steam of the water such as in the showers.

So when these cases – and it like 100 cases and 12 deaths came up, they went out of their way to actually hide it. And because of this, the doctors didn’t know and we have another 177 deaths from bacterial pneumonia, which is what Legionnaire’s is that have gone misdiagnosed, basically. My son had pneumonia in September of 2014 and he 10 and that odd for someone to get pneumonia at that point in time. But my doctor, the pediatrician didn’t know to look for Legionnaire’s so he didn’t, because no one alerted the doctors that there was this huge outbreak. They actually went out of their way to cover it all up. And because of that people died. So we were fortunate with my son, that he was put on the right antibiotic. But other people were not so lucky. So we’re looking at about close to 200 people that don’t have answers and there’s no way to find justice for them because they lost their loved ones.

BETWEEN THE LINES: Melissa, as you look at these charges being leveled at the state officials, is this too little too late? Or are you satisfied that the wheels of justice, although they’re slow, are finally starting to move in the right direction.

MELISSA MAYS: It’s a good start. It’s not good enough, but there has to be punishment for these people that completely did not do their job, they did the opposite. It needs to go up higher, because at the end of the day, these direct recruits reported to the governor. And his whole thing was running the state of Michigan of a business, instead a government, and we see that on a national level now. And the scary part about it is, is that profit was put over people the entire time. In these emails going back and forth, they were more worried about backlash and how much this was going to cost and what this was going to do rather than saving these people’s lives, because again, even though we’re seeing these charges, no one is in jail and we want them to live in Flint. We want them to shower in the burning, blistering, showers that we have to deal with and worrying if this shower is going to make me sick. Is this water going to make me sick? Is this water going to hurt my kids? Do these filters work?

I mean there’s too many unanswered questions, because, at the end of the day, we still can’t use our water and there’s no end in sight for that.

BETWEEN THE LINES: Melissa, I’ve read some opinion in Flint that residents there are really pushing for an indictment of Gov. Snyder himself for his role in this crisis. What’s your view of Gov. Snyder and should be the next step in terms of legal cases being developed around the Flint water crisis?

MELISSA MAYS: Oh, I absolutely agree because Gov. Snyder decided to take away the democratic responsibilities and right of the Flint residents and our elected officials locally, and have the state be the complete dictatorship – which is basically what the Emergency Manager law is. To settle a bottom line, he put one person in that he appointed and he was unelected that answered only to him, and so there was no way that he could say that he didn’t know what was going on. Well, when you set up an emergency manager dictorship structure and you put yourself in complete charge of it, you have to be completely prepared to deal with the consequences and you need to be held accountable. And that’s where he sits right now. He needs to be held accountable.

For more information visit Water You Fighting For at wateryoufightingfor.com; Water You Fighting For on Facebook at facebook.com/WaterYouFightingFor; Food and Water Watch at foodandwaterwatch.org.