bankdecay

New Deal accomplishments: Do conservatives who attack the New Deal actually know what America gained from it?

Reblogged from azspot

A good portion of Franklin Roosevelt’s immortality rests upon the New Deal’s physical works; but even more rests upon its transformation of the nation’s social and economic structures.

Here we must consider Americans’ relationship with what is, after all, their government. The New Dealers did not think about government in the limited terms of their predecessors, as an agency of national defense and little else. They did not perceive it as an antagonist of the common man, an enemy of liberty, or an entity interested in its own growth for growth’s sake. They understood that it was a powerful force and that its power could be exercised by inaction as well as action, to very different ends. The condition of the American people when the New Dealers assumed office demanded ameliorative action, and this they strived to deliver. They did not invariably achieve their goals, but in appraising their performance it is important to acknowledge that the crisis they addressed was uniquely cataclysmic in American history, and that suitable precedent for addressing it simply did not exist.

Federal deposit insurance, by eliminating bank runs even in times of economic crisis, cut the number of bank failures from the peak of 4,000 in 1933 to nine the next year. Bank failures would not exceed 75 in any one year until the savings-and-loan crisis of the 1980s, and for a three-decade stretch beginning in 1943 never exceeded single figures. The importance of this record for depositor confidence and the safety of the nation’s monetary stock is incalculable.

The reforms implemented under the Securities Exchange Act of 1934, which established the Securities and Exchange Commission, professionalized an industry burdened in the aftermath of 1929 with a reputation for insider transactions and sharp dealing. The transparency of financial reporting mandated by the act for public corporations and brokerages set the foundations for the explosive growth of the U.S. capital markets and corporate economy ever since.

The New Deal instilled in Americans an unshakable faith that their government stands ready to succor them in times of need. Put another way, the New Deal established the concept of economic security as a collective responsibility. As of this writing, Social Security, by any measure the outstanding domestic achievement of the Roosevelt administration, serves 54 million beneficiaries. Over the decades the program has kept many tens of millions of American workers and their families out of poverty. The promise of corporate pensions has largely disappeared from the employment contract and the investment markets have disappointed many workers’ expectations of comfortable retirements, but Social Security endures, providing retirees with benefits that grow with inflation and that cannot be outlived. Social Security began as an “awkward and insufficient” program, as Rexford Tugwell would observe; but it was expanded in succeeding decades, under Republican and Democratic presidents alike, in a continuing effort to uphold its original promise. Its 1960s addendum, Medicare, sprang organically from that promise.

(Source: azspot)

$1 Of Lobbying Money Made Banks $500 in Bailout Funds

Reblogged from ryking

govtoversight:

According to a new study, for every $1 banks spent lobbying they received about $500 bank in bailout funds through the Troubled Asset Relief Program. Banks who spent money on lobbying were 42% more likely to receive bailout funds.

We talked with one of the authors of the study about what this means for lobbying and the Super Committee and where they plan to go from here with their data. Read the whole interview on the POGO blog.

“Occupy Wall Street” and the History of Democratic Finance Protest

Reblogged from wellthatsjustgreat

The difficulty in dealing with our founding battle for democratic economics arises in part because the movement was not against England but against the very American banking and trading elites who dominated the resistance to England. That complicates our founding myth, possibly unpleasantly. Also, it was a generally losing battle. With ratification of the Constitution, Hamiltonian finance triumphed, and people looking to Jefferson and Madison for finance and economic alternatives to Hamilton are barking up the wrong tree, since what those men knew, or even really cared, about finance could be written on a dime. (Anyway, in pushing for creating a nation, Madison supported Hamiltonian finance down the line. Their differences came later.) When Occupy Wall Street protesters say “It’s We the People!” they’re actually referring to a preamble, intending no hint of economic democracy, to a document that was framed specifically to push down democratic finance and concentrate American wealth for national purposes. Not very edifying, but there it is.

The Tea Party, meanwhile, has taken up founding economic issues from a right-wing point of view, associating itself with the upper-middle-class Boston patriots (often mistaken for populist democrats) who led a movement against overrreaching British trade acts in the 1760′s and were important to the impulse toward American independence. I’ve written fairly extensively about where and how I think the Tea Party goes wrong on the history of the founding period. But at least they’re framing their objections to current policy, and framing the historical roots of their ideas, not mainly in cultural but in economic terms.

Like it or not, though, it is Occupy Wall Street that has the most in common, ideologically, not with those Boston merchants and their supporters but with the less well-known, less comfortably acknowledged people who, throughout the founding period, cogently proposed and vigorously agitated for an entirely different approach to finance and monetary policy than that carried forward by the famous founders. Amid horrible depressions and foreclosure crises, from the 1750′s through the 1790′s, ordinary people closed debt courts, rescued debt prisoners, waylaid process servers, boycotted foreclosure actions, etc. (More on that here and here.) They were legally barred from voting and holding office, since they didn’t have enough property, so they used their power of intimidation to pressure their legislatures for debt relief and popular monetary policies. Their few leaders in legit politics included the visionary preacher Herman Husband, the weaver William Findley, and the farmer Robert Whitehill.

They had high hopes for American independence. In the 1770′s, their “out-of-doors” collaboration with the famous elites was critical to enabling the Declaration of Independence — even though none of their names appears there (well, Benjamin Rush’s does, but by then he’d become unradicalized). Their democratic, egalitarian hopes dashed, in the 1780′s, in western Massachusetts, they marched on the state’s armory in Springfield to reverse regressive finance policies that had again plunged ordinary people into debt peonage and foreclosure (elites called that action, reductively, Shays’s Rebellion). In the 1790′s, with the Constitution in force, and Hamilton’s economics the law of a powerful new nation (partly in direct reaction to the Shays action), populists took over the militia and debt-court system throughout western Pennsylvania and western counties of neighboring states, flew their own flag, and tried to secede from the United States and form an economically egalitarian country. Hamilton dubbed that action, again in a successful effort to reduce it, the Whiskey Rebellion, and he and President Washington responded, naturally enough, by occupying western Pennsylvania with federal troops.

(Source: azspot)