Political Irony

I hoped that there would be a huge public outcry about what happened to Carmen Segarra, but so far it has been all but ignored by the mainstream media. Have you ever wondered how all our banks and financial institutions started failing, forcing us to bail them out, and nobody saw it coming? If yes, then read on.

In the aftermath of the “great recession” people wanted to know why the Federal Reserve, which was originally put in place to prevent meltdowns, had failed miserably. The problem was that the culture at the Fed was completely deferential to the banks. To solve this problem, the Fed hired a bunch of expert bank examiners who weren’t afraid to force banks to follow the law. One of them was Carmen Segarra. She was highly qualified for the job, and set out to do exactly what was asked of her to prevent another economic meltdown. Her task was to help regulate Goldman Sachs.

But after only seven months, she was fired. The Fed claimed it was for “performance problems“, but what they didn’t know is that Segarra had run smack into the deferential culture she was hired to change. Knowing this, she had purchased a small audio recorder and had recorded 46 hours of meetings.

Excerpts of those recordings were broadcast on National Public Radio.

The recordings document just how deferential the people whose job it is to regulate the banks can be to those banks. For example, in one meeting a Goldman employee says “once clients are wealthy enough certain consumer laws don’t apply to them.” In other words, laws don’t apply to the rich. After the meeting, Segarra says to a fellow Fed regulator how surprised she was by that statement, and the regulator replies “You didn’t hear that.”

In other tapes, Segarra’s managers try to get her to water down her reports on Goldman, and even try to get her to be more deferential to Goldman, the very thing she was hired to get rid of.

As an article in Bloomberg puts it:

1. You sort of knew that the regulators were more or less controlled by the banks. Now you know.

2. The only reason you know is that one woman, Carmen Segarra, has been brave enough to fight the system. She has paid a great price to inform us all of the obvious. She has lost her job, undermined her career, and will no doubt also endure a lifetime of lawsuits and slander.

So what are you going to do about it? At this moment the Fed is probably telling itself that, like the financial crisis, this, too, will blow over.

In the aftermath of the broadcast of these tapes, Senators Elizabeth Warren and Sherrod Brown both called for full congressional hearings.

With so many politicians in the pocket of the big banks, do you think we will get these hearings?

Only if we insist.

Republicans oppose raising the minimum wage because they claim that it will cost jobs. Despite the fact that there is plenty of evidence of the opposite. After all, if working-class people earn more money, they spend it. If rich people make more money, they send it to offshore tax havens!

But here’s something interesting. An article in The Atlantic points out that companies that pay higher wages actually survived the last recession far better than those that pay minimum wage. It sounds counter-intuitive, but if you think about it, it isn’t really.

For example, consider QuikTrip, a chain of combination convenience stores and gas stations. That’s a job that practically screams minimum wage. But while the average cashier in the US makes just over $20,000 a year, QuickTrip pays their entry-level employees $40,000 a year plus benefits! How did that work out? During the recession, while most low-cost retailers were shutting down stores and laying off employees, QuikTrip was was expanding to new locations and hiring more workers.

Or consider Trader Joes and Costco Wholesale, which are both companies known for their low low prices. But both of them pay wages far above average. Why? Because when a company pays workers a decent wage, they are rewarded with lower turnover. That in turn lowers training costs, increases efficiency, and increases sales. At QuikTrip, sales per square foot are 50% higher than the average convenience store chain. And when your employees are happier they do their jobs better, and that naturally translates into happier, more loyal customers.

When financial times are tough, too many companies make the mistake of trying to save money by cutting back on employees. That’s what happened to Borders and Circuit City. Both companies responded to the recession by cutting staff — and both ultimately went bankrupt.

What’s really ironic about this is that many of these same companies that are trying to save money by cutting workers salaries and benefits are simultaneously raising how much they pay their top executives. They think that they have to pay top dollar for a CEO in order to do better as a company.

The evidence shows that they have it completely backward.

copy; Steve Sack

To be honest, I don’t really fault the Republicans for doing these things. After all, we know how to get rid of things like gerrymandering. And our founding fathers didn’t even guarantee the vote to a majority of US citizens (women, slaves, non-landowners, and others), and for some reason set election day to be a weekday day (and didn’t make it a holiday).

If we really want to make good on the promise of “one person, one vote” we need to do something about it.

© Tom Toles

Are you scared yet?

I always expected that people would eventually get tired of all the fear tactics and start ignoring them, but Fox News is still popular, and the upcoming election seems to indicate that fear still works.

Thom Tillis, Republican candidate for the US Senate in North Carolina.

Last year, as Speaker of the assembly in North Carolina, Tillis led the fight to pass a bill rejecting Medicaid expansion (a key part of Obamacare). According to Tillis “An expansion of Medicaid would cost North Carolina taxpayers hundreds of millions of dollars through 2021.” He also said “If these liberal activists were truly serious about reducing the cost of health insurance, they would be in Washington protesting Obamacare, an abomination that has caused insurance premiums to skyrocket for working families.”

Tillis backed efforts in the Senate that led to the government shutdown, saying “I believe Obamacare is a mortal threat to our economy. It will decrease healthcare quality and raise healthcare premiums and Republicans should do everything in our power to undo it.” In his current campaign for the Senate, his website calls Obamacare “a cancer on our national economy.” During the primary, he boasted in TV ads that he “stopped Obamacare’s Medicaid expansion cold. It’s not happening in North Carolina, and it’s because of Thom Tillis.”

But now, his opponent in the Senate race has been winning supporters by blasting him for opposing Medicaid expansion, so what does Tillis do? He appears on TV and claims that the state should consider expanding Medicaid. He even said that he doesn’t have any ideological objection to expanding the coverage.

As recently as August, Tillis was still claiming that he absolutely wanted to repeal Obamacare, but was starting to hedge his bets, talking about a transition period and maybe keeping some components of the law.

At least on some issues, Tillis is being consistent. In the same interview this week, he said that there is no simple explanation for what causes climate change.