Consumer Financial Protection Bureau

A big part of the reason behind the financial crash was a lack of sensible practice within the industry. Here's a rundown on the consumer protection provisions in the new financial reform bill. You can read more in this New York Times article. Yahoo News has a good synopsis here.

A new Consumer Financial Protection Bureau will be created, housed in the Federal Reserve. It will consolidate the functions of numerous existing bodies, and its sole responsibility will be to safeguard the interests of consumers. This was a key element championed by consumer groups such as AARP and consumer advocate Elizabeth Warren, Congressional watchdog over TARP funds.

Financial institutions and instruments such as banks, mortgage lenders, credit card and private student loan companies, payday lenders, community banks and credit unions will be subject to new rules and transparency requirements. People can get a copy of their credit report annually by going to AnnualCreditReport.com. Lenders will have to actually check people's income and assets. There can be no prepayment penalties for adjustable rate mortgages and no bonuses can be paid to salespeople based on the interest rate the customer gets. Origination fees will be capped at 3%.

Banks will have to keep a stake in the loans they make. They will not just be able to sell them all off once made, thus giving them an incentive to make sure they are extending good loans to credit worthy customers. Trading in such exotic instruments as derivatives will not be banned, but banks will be able to commit no more than 3% of their assets to them and at least they will all have to be conducted openly will full public disclosure. If banks fail the industry itself will pay the costs rather than a federal bailout fund. (Depositors' money will still be guranteed by the FDIC.)

In addition to the significant credit card reforms already enacted last year sellers will be able to offer customers discounts for paying cash but will not be able to offer discounts for using one credit card over another.

There were setbacks for consumer protection in the agreement. For one thing, auto dealers were excluded. For another, annuities escaped some of the strong scrutiny other instruments will face. But in total, these developments represent a gain for consumers and a bit of a brake for some of the recklessness that led to the latest meltdown.

It is an achievement that never would have happened under the other party and that Obama and the Democrats will tout as the midterms approach.

Obama Shows Leadership, Sacks McChrystal

Today President Obama did what he needed to do. In accepting the resignation of Afghanistan commander Gen. Stanley McChrystal the President asserted civilian control of the military, showed himself to be a strong leader and served notice that disrespect verging on rank insubordination cannot be tolerated.

Revelations that came out yesterday about a story in an upcoming issue of Rolling Stone Magazine appeared to show the general and his staff openly contemptuous of the authority of the Vice President, Chairman of the Joint Chiefs of Staff, Ambassador to Afghanistan and the National Security Advisor. A reference to the President himself was in a similar vein. The quotes have to be seen to be believed. Click here for a synopsis.

An attitude that would not be acceptable for a lieutenant with respect to a captain or major certainly cannot be permitted with respect to the top members of the chain of command. Obama would have been seen as weak beyond redemption had he not reined in such public humiliation.

Fortunately, the highly respected and proven effective counterinsurgency leader Gen. David Petraeus was available and willing to take a step down from theater commander to take McChrystal's place at the head of operations in Afghanistan. But even if he hadn't been, Obama would have needed to make the change. A soldier who doesn't know enough to act like one cannot be trusted in a position like McChrystal held. Obama correctly acted without delay in getting rid of him. This was a job well done.

Star Wars in Concert

Thursday night my wife and I went to see "Star Wars in Concert" at the Save Mart Center arena in Fresno. An 86-piece orchestra played the epic John Williams music, a 60-foot screen showed accompanying footage from the six films and the whole was narrated by Anthony Daniels, who played C3PO though the entire 28 years of the saga. (Yes, he really talks like that!) It was a tour de force, well worth 4 stars on my entertainment rating scale. You can see images from the Fresno Bee here.

Though there were many, many families present among the crowd of thousands, it may be difficult for some younger people to appreciate the immense impact the inception of the Star Wars franchise had with the first film in 1977. I suppose the more recent Harry Potter phenomenon might be the closest parallel. Star Wars was truly transformative.

The initial release in 1977 wasn't that well publicized. I had heard about the film but was reluctant to go, afraid of being disappointed by yet another sci-fi dud. Then I heard one guy at work talking it up. He said he had "seen it again last night." Again? I asked him how many times he'd seen it. "Seven," he replied. OK, I figured, this is worth a try.

For one thing, it was the first space film in which the special effects were believable. In fact, they were more than that. They were, for the time, awe-inspiring. They hold up well even today, for that matter. The first scene in which Princess Leia's ship crosses the screen (the beginning of Episode IV as they are now numbered) followed by the immensity of a pursuing Imperial star destroyer left all audiences slack-jawed in amazement. The music, too, was incredible. Inspiring, haunting, romantic, funny, action-filled, celebrational, sinister, you name it, the compositional genius produced masterworks so integral to what was happening on screen they were seemingly felt rather than heard. If more classical music was like that symphony halls would be packed all over the world--and not just by the upper sliver of the social pyramid.

George Lucas's classic tale of good vs. evil told against a backdrop of heroism, sacrifice and personal redemption came during the post-Vietnam era when Americans craved a clearly defined and spiritually based affirmation. Yet its international popularity also demonstrates the universality of its themes across the human family.

It is a modern statement of that oldest of Western themes, The Quest, that goes all the way back to Gilgamesh and The Odyssey. Honor and justice matter. There is power in evil but good will overcome it if it remains steadfast and true. And no one is so far gone that they cannot atone and once more be made whole.

It was a grand show. If you get a chance and it comes to your locality I heartily recommend getting some tickets and losing yourself in the magic.

Supreme Court Blocks Arizona Clean Money Campaign

It was bad enough when the U.S. Supreme Court recently ruled that corporate money could be spent on political speech without limits. But now it has really gone over the line in issuing an immediate stay against Arizona's 10-year-old campaign finance system.

Though I don't agree with the first ruling, I can understand it. If you grant that a corporation is a "person" entitled to First Amendment protection and that society has no interest in trying to maintain fairness in political campaigns (two very big ifs) then I can see where the conservative court majority is coming from. They say you can't restrict advertising from any quarter.

Yesterday's intervention in Arizona's clean money system is a different animal altogether. Before even hearing the case, they issued an emergency order to prevent the state from disbursing matching funds to candidates already entitled to it under existing law in the middle of a campaign. Somehow they seem to feel that "First Amendment free speech rights of wealthy or well-heeled candidates are violated when extra money flows to their opponents." The Arizona system results in a greater amount and more balanced speech, not less. And talk about "judicial activism." Governor Jan Brewer, who had $1.4 million in matching funding pulled from her by the ruling after her primary opponent Buz Mills had already spent over $2 million, lamented, "It is extremely unusual for the judicial branch to change the rules of an election while it is being held."

The current court is more and more brazenly favoring corporations and the wealthy over any and all attempts to level the playing field. This shows how crucial appointments to the high court truly are. Without a countervailing check soon, America is headed ever more inexorably toward an unabashed plutocracy.

I have two digressions to make here at the end. First, you might have noticed I have had to go to moderated comments recently. I started to get comments with links to pornographic sites and I want no part of that kind of stuff in my blog. So please go ahead and post, but just be aware that I'll have to take a look at it and approve it before it appears. Secondly, yes, I was elected to the Democratic County Central Committee in Tuesday's election. Many thanks to everyone who gave me your vote, your encouragement or recommended me to your friends. I will work to be worthy of your trust.

Weaponized Botox?

I picked up a copy of the June, 2010 edition of Scientific American yesterday; thought I'd catch up on some of the interesting goings on in the world of science and technology. There's a lot of fascinating stuff in it, but one thing that truly caught my attention was an article by Ken Coleman and Raymond Zilinskas called "Fake Botox, Real Threat."

It seems illegal labs are producing the botulinum neurotoxin (BoNT) and selling it to unscrupulous doctors and cosmeticians. Irvine California based Allergan has the patent and there are only seven companies in the world licensed to make the popular substance that, injected in tiny amounts, reduces wrinkles. They estimate that up to 90% of the Russian market and a third to a half of the botox in some other countries are black market produced.

The problem is that BoNT is "the deadliest substance known to science." One ten millionth of a gram is a lethal injected dose for a 170 pound person. One gram could be lethal to 14,285 people if ingested, 1.25 million if inhaled and 8.3 million if injected. And they say that anyone with a master's degree in biology would have little trouble growing the anaerobic botulism microbes and harvesting their waste product, which is the BoNT. Chad Livdahl and Zarah Karim pleaded guilty to doing just that in 2006 and received sentences of nine and six years, respectively. Illicit production seems to be extremely high in Southern China and Southern Russia, possibly including Chechnya.

The ramifications for terrorists taking note of this are terrible to contemplate and probably just around the corner. If it's easy to grow and just a little bit of it can kill a whole lot of people it sounds like a mass murderer's dream-and everyone else's nightmare. It's just one more thing for the world's security agencies to worry about in our increasingly dangerous world.

What Rand Paul Means

You may have heard this past week about the big win for tea party favorite Rand Paul in the Kentucky Republican senatorial primary contest. You may also have heard about the controversy engendered by his comments that he has some philosophical problems with the Civil Rights Act of 1964. I'll try to provide a little clarity.

Paul's win this past Tuesday, a nearly two to one shellacking of Trey Grayson, Republican Senate minority leader Mitch McConnell's handpicked candidate, was part of a larger narrative that saw insurgent Joe Sestak beat Arlen Specter in the Democratic senatorial race in Pennsylvania. It seems adherents of both parties are going for hardliners rather than moderates.

Beyond that, Paul, the son of Texas congressman and former Libertarian presidential nominee Ron Paul, created some waves by saying he'd have trouble voting for the landmark Civil Rights Act today. He said he opposes any kind of racism and supports enforcing non-discrimination in public facilities, but is against government telling private business how to run its operations. You can see his interview on MSNBC with Rachel Maddow here. She asked, "Do you think a private business has the right to say, we don't serve black people?" He answered, "Yes. I am not in favor of any discrimination of any form...but I also don't want to limit their speech in any way." He also complained against President Obama's "Unamerican" criticism of BP corporation running its business in the way it sees fit.

This kind of thing sums up the arch conservative to Libertarian wing of conservatism nicely. They have near-absolutist views on property rights. It is my restaurant, they feel, and I can discriminate if I want to. It is my business, they say, and if I cause pollution or noise that harms other people in the vicinity, my property rights trump their health and safety. They have a similar "to hell with everyone else" view of civil rights. My right to treat other people in a dehumanizing way outranks their right to be treated as worthwhile human beings. They hold these views sincerely, and feel they are productive of freedom.

Such a perspective is, of course, terribly flawed. The right to dehumanize people is never justified. Where does it end? Does someone's right to be secure from rape end when they step onto the rapist's property? That is where Paul's reasoning leads. Segregation and discrimination are crimes. We have declared this as a nation in the 14th Amendment, the Brown v. Topeka ruling and the Civil Rights Act. As such, there cannot be selected areas where criminals who violate them are sheltered from the law. The tea party-Libertarian elevation of property rights over human rights marks them as extremist, inegalitarian and un-American in the most profound sense. The elevation of the "right" of the abuser to abuse over that of the intended victim to be treated fairly marks them as inhumane. The utopia envisioned by people like Rand and Ron Paul would devolve into a nightmare of protected racism and exclusionism of all types. As Washington Post columnist Eugene Robinson surmises, when it comes to Libertarian theory, "purist philosophy leads people to believe in the purest nonsense."

California Proposition Recommendations

California holds its Primary Election Tuesday, June 8, and most of the state's voters got their sample ballot or vote by mail materials this week. There are five propositions up for consideration this time, and they represent both the highest aspirations and worst abuses of direct democracy. Here are my recommendations.

Proposition 13, Property Taxes and Earthquake Safety. YES
Proposition 14, Primary Elections NO
Proposition 15, Public Funding of Campaigns YES
Proposition 16, Local Public Electricity NO
Proposition 17, Auto Insurance NO

Prop 13 is a good idea. Under it, if a property owner pays for an earthquake safety upgrade (seismic retrofitting) the property will not be reassessed for property taxes until it is sold. Currently, a structure built of unreinforced masonry is reassessed after 15 years, providing a disincentive for the owner to make such a building, the very type most at risk of collapse in an earthquake, more safe. This proposition deserves your support.

Prop 14, also called the "Open Primary," may seem like a good idea, but it isn't. It passed the legislature in 2009 as part of a political deal to get a budget agreement. State Senator Abel Maldonado (now Lieutenant Governor) demanded its inclusion as his price for voting for the budget. Prop 14 would pertain to all statewide offices, congressional and state legislative races and state board of equalization members. In the primary, all candidates from every party would be on the same ballot. Then the top two vote-getters in the primary would be on the ballot in the general election in November.

This proposition is bad for several reasons. First, the Second Section part D allows candidates to choose either to declare their parties or keep them secret. Candidates could run stealth campaigns, pretending to be Republican in Republican majority areas or Democrats in Democratic majority areas without having to divulge their true affiliations. Second, this would freeze the minor parties completely out of the general election, since they practically never would finish in the top two in the June Primary. Their voters would be shut out of their choice in November. Third, it could frequently result in two Democrats or two Republicans running against each in the general elections. Not only minor party supporters, but in those districts, even Democrats and Republicans would have no choice to vote for a candidate of their own party in the election. Finally, there is no provision for allowing write-ins, thus forcing everyone to vote for one of the two (or even one) party that got through the primary. Prop 14 is not friendly to free choice among the voters and ought to be defeated.

Prop 15 would establish the office of Secretary of State as a test case for public financing of campaigns in California in the elections of 2014 and 2018. It follows on the lines of systems in place in Arizona, Maine and North Carolina. I think it's a good idea and we should try it. The office of Secretary of State is a good beginning because its main function is to make sure elections in the state are run fairly and impartially. Its other main task is to monitor the activities of lobbyists. Taking special interest money out of this campaign is an excellent pace to start.

To qualify for the funding, a major party candidate would need to get 7,500 $5 contributions. A minor party candidate would need to get 3,750 such contributions. Then they would qualify for state funding. The funding would come from increasing the fees on lobbyists from $25 every two years to $700. The legislative analyst says this would raise more than $6 million every four years. If a candidate was self-funding or getting help from outside groups and going over the public financing amounts, the fund would send matching funds to the qualified candidates.

You can see from the arguments in the voter information guide who is for and against this measure. Impartial groups concerned about good government like the League of Women Voters and Common Cause support it. Interest groups who want to buy and control politicians such as the Manufacturers Association, unions and interest lobbies are opposed. Get the picture? Vote yes on 15.

Proposition 16 is a blatant special interest grab by Pacific Gas & Electric to solidify their monopoly control. Vote no. If a city or county wanted to join Los Angeles or Sacramento in running their own power sources they would need not only a vote of their elected representatives but a 2/3 vote of the electorate. They don't need to do this to pave a road or staff a park, but only would for this purpose. PG & E would be able to overwhelm the jurisdiction with misleading advertising and get only 1/3 of the people afraid in order to defeat such efforts. LA and Sacramento, for instance, did not suffer through the 2001 blackouts and rate gouges the rest of the state did. Do you trust PG & E to watch out for your interests? If you are astute enough to read this blog I would imagine not.

Similarly, Prop 17 is a special interest grab by the auto insurance industry. Mercury Insurance is bankrolling this effort, and if you feel they have the best interest of consumers at heart, I have some Florida swamp land you are probably interested in. While this sneaky scam permits car insurers to give you a discount if you have had insurance with another company for the past five years, it allows them to jack up your rates in other cases. The proponents' own argument in the voter information guide says it could save customers $250, while the respected nonpartisan watchdog Consumers Union says it will hit customers with surcharges over $1000, and points out that states with this type of law have rates ranging from 73% to 227% higher than California. Don't fall for it. Vote no on 17.

If you are voting by mail be sure to send it in so it is received by June 8. If you miss that, you can take your ballot in to a polling place on Election Day. Locations are included in an insert in the voting materials envelope you received. For more material that tries to offer unbiased information, go to http://www.easyvoter.org/ or http://www.smartvoter.org/.