Each morning, Bill Scher and Terrance Heath serve up what progressives need to effect change on the kitchen-table issues families face: jobs, health care, green energy, financial reform, affordable education and retirement security.
MORNING MESSAGE: 10 Reasons To Be Suspicious About Wall Street's Facebook Fiasco
OurFuture.org's Richard Eskow: "Three of Wall Street biggest and best-known financial institutions handled the Facebook IPO, so why were people immediately suspicious when the stock soared and then promptly tanked? Easy answer: Because three of Wall Street biggest and best-known financial institutions handled the Facebook IPO ... Here are ten reasons why it makes sense to be suspicious of the Facebook IPO, starting with the fact that any overview of the three institutions which handled it might best be described as 'rounding up the usual suspects.'"
More Evidence Wall Street Needs Supervision
Morgan Stanley facing regulatory scrutiny after Facebook IPO. Bloomberg: "William F. Galvin, Massachusetts’ secretary of the commonwealth, said his securities division subpoenaed Morgan Stanley over talks between Scott Devitt, the research analyst, and the firm’s institutional investors about Facebook’s revenue. Those communications also may be 'a matter of regulatory concern' to the Financial Industry Regulatory Authority, the industry-funded brokerage watchdog, and the U.S. Securities and Exchange Commission, Finra Chief Executive Officer Richard Ketchum said yesterday in an e-mail."
SEC digging in to JPMorgan Chase. Bloomberg: "U.S. Securities and Exchange Commission Chairman Mary Schapiro said the agency is 'very focused' on determining whether JPMorgan Chase & Co. (JPM) appropriately disclosed changes it made during the first quarter to a complex risk calculation ... When JPMorgan reported earnings on April 13, it said the division’s [value at risk] was $67 million when it was actually $129 million, according to a presentation on the company’s website that day and company disclosures since then."
Jamie Dimon expected to face Congress soon. Politico: "A date hasn’t been set for Dimon’s appearance — it’s supposed to come after Tuesday’s hearing and another one scheduled for June 6 — but already, the administration is promising to stretch the pending investigations beyond JPMorgan and use the findings to shape how Dodd-Frank is interpreted."
No evidence that big banks help the economy, notes NYT's Eduardo Porter: "The economics suggest that big banks are less efficient at credit creation than smaller ones. And there is no evidence that the simpler financial system we had from the 1940s through the 1970s restrained growth. In fact, for all its innovation, the financial industry of today is less efficient than it was in the age of the railway, according to research by Thomas Philippon at New York University. That is, it charges the rest of society more for financial intermediation than it did 130 years ago. Considering the evidence, regulators could at the very least remove the taxpayer subsidy that has paved the road for banks to become so big."
Romney's Job Was Not To Create Jobs
VP Biden keeps focus on Bain. W. Post quotes: "Your job as president is to promote the common good ... making money for your investors, as Romney did very well, is not the president’s job. The president has a different job."
Former private equity executive Steven Rattner reminds that Romney was not a job creator, in NYT oped: "...don’t confuse a leveraged buyout with job creation. Under Mr. Romney’s leadership, Bain Capital engaged in the less attractive practice of putting more debt on seemingly successful investments in order to take dividends out. In at least four instances of Bain Capital investments during Romney’s tenure, these 'recapped' companies, of which two were featured in the Obama ads, subsequently went bankrupt, costing thousands their jobs ... Aware of private equity’s reputation, Mr. Romney still trots around the country erroneously calling himself a 'venture capitalist.'"
Former Reagan aide David Stockman concurs. Political Wire quotes: "I don't think that Mitt Romney can legitimately say that he learned anything about how to create jobs in the [leveraged buyout] business. The LBO business is about how to strip cash out of old, long-in-the-tooth companies and how to make short-term profits...All the jobs that he talks about came from Staples. That was a very early venture stage deal. That, you know they got out of long before it got to its current size."
Economy looks better in swing states. Bloomberg: "The unemployment rates in a majority of the 2012 battleground states are lower than the national average as those economies improve ... Five of the Bush-turned-Obama states had lower unemployment rates in April than the 8.1 percent national average, and in three of the states joblessness had dropped below 7 percent."
Austerity Breeds Recession Fears In US and Europe
Abrupt spending cuts and tax increases could cause 2013 recession, says CBO. NYT: "The economy could relapse into a recession if President Obama and Congress remain at an impasse and allow several big tax increases and spending cuts to take effect at the start of 2013 ... In the first half of 2013, the economy would contract at an annual rate of 1.3 percent, the report concluded, instead of growing by a similar rate. Slow growth would resume in the second half ... It suggested a combination of higher deficits in the short term with adoption of tax and spending policies meant to gradually reduce annual deficits later in the decade."
Europe on path to recession, warns OECD. McClatchy: "The Organization for Economic Cooperation and Development, the Paris-based statistical arm of wealthy nations, issued an outlook that projects that the economy of the entire eurozone will contract 0.1 percent this year. It also predicted that next year’s growth would be just 0.9 percent. The OECD’s projections added to the sense of urgency surrounding what was billed as an informal dinner among European leaders in Brussels to discuss ways to stimulate growth."
Reid slams GOP "extremism" for delaying budget deal. Politico: "Senate Majority Leader Harry Reid says a tax deal is 'impossible' before the elections, and here's why: 'Republicans' blind adherence to tea party extremism.' ... Reid said the GOP must accept higher taxes on those earning more than $1 million and corporations, and drop its leading Medicare overhaul proposal, in order to reach a consensus with his party."
Republican "tax reform" is just another tax cut for the rich. EPI's Andrew Fieldhouse: "...conservatives falsely equate a 'simpler' tax code with cutting and consolidating tax brackets, which would confer big tax cuts to upper-income households in the top tax brackets ... Boehner’s implied objectives of revenue and distributional neutrality—which guided the Tax Reform Act of 1986—are now wholly inappropriate benchmarks, as they would lock-in the past decade’s unaffordable and regressive Bush-era tax cuts and exacerbate Gilded-Age levels of income inequality."
Breakfast Sides
WH renews push for clean energy tax credits. The Hill: "President Obama will ramp up his call for extension of the production tax credit in a speech at an Iowa turbine blade maker on Thursday ... 'This year it was a banner year for wind production, but without an extension of the production tax credit, we concede job losses up to 37,000,' [White House energy aide Heather] Zichal said. The administration is also pushing for another round of a stimulus-law program that provided $2.3 billion in tax credits for manufacturing green-energy-related equipment, an initiative commonly known as the 48C program..."
Some health care improvements will last no matter what Supreme Court does. NYT: ".. Dr. Richard J. Gilfillan, director of the federal Center for Medicare and Medicaid Innovation [said] private insurers are embracing ideas that Congress authorized for Medicare, like coordinating care, rewarding providers who deliver superior care and penalizing those who subject patients to needless risks ... other changes in the delivery and financing of health care were gaining momentum. These include paying a fixed amount to doctors and hospitals for a bundle of services, rather than a separate fee for each service; designating a 'medical home' with a primary care doctor to coordinate services for each patient; and imposing financial penalties on hospitals with large numbers of patients who are readmitted within a few weeks after they are discharged."
