W21st NYC's List: 2010 Mid-term Elections

• “a historic process in which resentment against a disenchanted secular world found deliverance in the ecstatic escape of unreason.”

• Spencer Bachus, a potential Republican chairman of the House financial services committee, has fired the first salvo in a battle with regulators – warning them against harming US banks by curbing their trading activity.
• In a letter sent to the Financial Stability Oversight Council, Mr Bachus says that a ban on proprietary trading – known as the Volcker rule – that was included in the new Dodd-Frank financial reform law will “impose substantial costs on the American economy and market participants” with “doubtful” benefits. “Depending on how US regulators choose to implement it, the Volcker rule may spark a mass exodus of clients from US banks to banks based abroad,” he said in the letter obtained by the Financial Times. He highlighted UK-based institutions as possible beneficiaries.
• The proprietary trading ban, named after Paul Volcker, the former Federal Reserve chairman who proposed it, was opposed by most Republicans when it was passed by Congress in June. It also restricts banks’ investments in hedge funds and private equity firms.

• Mr Bachus told the FT that he would go “page by page . . . to identify job-killing provisions or lending-killing provisions”. He highlighted new rules pushing over-the-counter derivatives trading through clearing houses and on to exchanges as a problem for non-financial corporate users.

  “The derivatives provisions in Dodd-Frank alone... as they stand now they’re going to take a trillion dollars out of our economy. Think how many jobs that’s going to kill,” he said.

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• “Because his good-government streak and his push for changes in the campaign finance system had no political constituency,” Mr. Lee said, “they led to the lawsuit that opened up the floodgates.”
• Mr. Feingold has served in the Senate for 18 years and was seeking his fourth term. Mr. Johnson, a plastics manufacturer who had never run for office, won with 52 percent of the vote, to Mr. Feingold’s 47 percent.

• The premise – and central mistake – of the Obama administration in 2009-10 can be summed up in what the president said to leading bankers on that fateful day, March 27, 2009: “My administration is the only thing between you and the pitchforks”.
• The organizing notion then, provided by Larry Summers and presumably Tim Geithner, was that the “responsible” administration would protect global megabanks from “dangerous” populists, in return for cooperation and better behavior.  This kid gloves strategy turned out to be a very bad bet – not only is it far from best practice with regard to handling failed financial systems (there must be consequences for executives and shareholders, at the very least), but it also allowed banks and their close allies to bounce back to profitability and use that cash (underwritten by the taxpayer) to oppose the administration on financial reform and, according to credible public reports, to funnel large amounts of money into various “populist” anti-administration midterm campaigns. 
• The issue is capture.  Big banks in particular disproportionately captured the hearts and minds (and maybe more) of federal regulators.

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• Nobody cares about civility and bipartisanship, which in practice are code for Democrats giving in to Republican demands.

• Lawrence Summers, who was paid $8 million by Wall Street firms while advising candidate Obama,
• The banks have been made whole by the Fed, providing virtually interest-free money while purchasing trillions of dollars of the banks’ toxic assets. Yet the financial industry response has been what Paul Volcker has called a “liquidity trap”—denying loans for business investment or the refinancing necessary to keep people in their homes.