Joseph E. Stiglitz, Nobel prize winner and Columbia University professor, writes that big banks are pushing hard to stop any government regulation on derivatives. He writes that, “the Obama administration and the Fed, in opposing these restrictions, have clearly lined up on the side of big banks,”and writes that if, after this huge financial crisis, our democracy cannot deliver new regulation for such dangerous banking practices, it will be “a sad day for democracy.”

Excerpts from Stiglitz post, “Financial Re-Regulation and Democracy”:

• There is almost universal agreement that the crisis the world is facing today – and is likely to continue to face for years – is a result of the excesses of the deregulation movement begun under Margaret Thatcher and Ronald Reagan 30 years ago. Unfettered markets are neither efficient nor stable.
• Most of those responsible for the mistakes … have not owned up to their failures.
• Banks that wreaked havoc on the global economy have resisted doing what needs to be done. Worse still, they have received support from the Fed, which one might have expected to adopt a more cautious stance, given the scale of its past mistakes and the extent to which it is evident that it reflects the interests of the banks that it was supposed to regulate.
• We need to “hard-wire” more of the regulatory framework. The usual approach – delegating responsibility to regulators to work out the details – will not suffice.
• A court of law will decide whether Goldman Sachs’ behavior – betting against products that it created – was illegal. But the court of public opinion has already rendered its verdict on the far more relevant question of the ethics of that behavior. That Goldman’s CEO saw himself as doing “God’s work” as his firm sold short products that it created, or disseminated scurrilous rumors about a country where it was serving as an “adviser,” suggests a parallel universe, with different mores and values.
• The problem of too-big-to-fail banks is now worse than it was before the crisis. Increased resolution authority will help, but only a little: in the last crisis, US government “blinked,” failed to use the powers that it had, and needlessly bailed out shareholders and bondholders – all because it feared that doing otherwise would lead to economic trauma. As long as there are banks that are too big to fail, government will most likely “blink” again.
• The US government would be remiss to leave things as they are. The Senate bill’s provision on derivatives is a good litmus test: the Obama administration and the Fed, in opposing these restrictions, have clearly lined up on the side of big banks. If effective restrictions on the derivatives business of government-insured banks (whether actually insured, or effectively insured because they are too big to fail) survive in the final version of the bill, the general interest might indeed prevail over special interests, and democratic forces over moneyed lobbyists.
• If, as most pundits predict,these restrictions are deleted, it will be a sad day for democracy – and a sadder day for prospects for meaningful financial reform.

My motion to amend the constitution of the Montgomery County Democratic Party at the Reorganization Meeting last night received a polite hearing, but was overwhelmingly rejected. There were 117 delegates in attendance and a generous estimate is that my motion received, maybe, 25 votes. (187 of Montgomery County’s 360 precincts elected delegates, but 70 were “no shows.”) My motion was the only proposal to change the constitution.

After the meeting, I thanked Karl Keith, who was chairing the meeting at the time when my motion was discussed, for his consideration and for the easy and affable manner he showed in his position as chairperson. I spoke three times — only the first of which is captured on the video below. David Esrati — who is seeking the nomination to become the Democratic candidate for Congress for Oh-3 — was the only other person who spoke in favor of the motion and he was allowed to speak twice. Several people spoke in opposition, including the chairperson, Mark Owens.

My motion, and the short debate it initiated, was the only non-scripted part of the whole meeting. All the key outcomes of the meeting had been determined –by the powers that be — prior to the meeting and there was no variation. Mark Owens was chosen by acclimation to continue in his position as chairperson and former Dayton mayor, Rhine McLin, was chosen by acclimation as vice-chairperson.

At the Ward caucus, I was chosen as Ward Leader for Kettering’s Ward 4.

I just had a chance to talk briefly with Lynn Hulsey, the reporter for the Dayton Daily News. On my way home from making copies of the resolution for the Montgomery County Democratic Party Reorganization Meeting, I stopped in at the DDN office in the old NCR building on Main Street, and asked at the desk if I might speak with Ms Hulsey.

I was pleased that within a few minutes Hulsey showed up and greeted me.  I know I’ve met her before in a couple different settings — very professional and very considerate.

Ms Hulsey let me know, gracefully, that she doubted that my resolution was newsworthy and that the DDN is not likely to print any story concerning the inner workings of the MCDP at their Reorganization Meeting.  “Now, if it passes …” she said.  Of course, I told her, I didn’t expect the resolution to pass, but that, to me, it still would seem a good story for the DDN to cover.

Ms Hulsey told me that for political junkies the story would be interesting, but most people just wouldn’t be interested.  But she thanked me for coming in, said she appreciated the information and asked to let her know the outcome.  I told her that I very much appreciated her time.

I’m hoping that the DDN might change its outlook about what makes a story of value, worthy of investigation, worthy of investing time and effort into researching and writing. I would argue that the kind of stories that help explain our world are the stories that interest people. Everyone wants to have some insight into the answers to these questions:  Why do we continually elect such weak leaders?  Why does our political process fail to empower men and women of vision, imagination and conviction?  Why is our democracy becoming a failure?

Just recently, the DDN printed an article about family members in Montgomery County who work for other family members who are elected officials in the county. I’d like to see Ms Hulsey, or some other industrious reporter, do some research about the local Democratic Party.  A good place to start, I believe, would be to research the individuals who show up this evening as voting delegates to the Reorganization Meeting:  How many of these people hold patronage jobs assigned to them by elected Democrats?  How many of these people, themselves, are elected officials?