Wish U Were Here, Janet Yellen

Janet Yellen, Federal Reserve Chair 2014-2018

I’m going to miss the first woman to ever head the Federal Reserve, Janet Yellen, appointed by President Obama. She has just served the shortest term of any recent Chair. No, she wasn’t ill, newly pregnant, or incompetent; she just wasn’t reappointed by President Trump. She was known for consensus building.

One of two mandates of the Federal Reserve is sustaining employment, helping to finance jobs. Under Yellen’s tenure, unemployment decreased from 6.7 percent in 2014 to 4.1 percent in 2018. Trump took credit, tweeting women’s job rates while pink-hatted women marched on his inaugural anniversary (while the government shut down.) But without explanation or complaint, he’d already replaced Yellen with yet another pale male, William Powell.

Her male predecessors served terms more than twice as long: Ben Bernanke (8 years), Alan Greenspan (19) years, and Paul Volcker (8) years. Longer tenures supposedly help ensure financial stability. In Screwnomics, I complain women like Yellen can and do learn to “mansplain” the economy. Her monetary addresses to Congress delivered like those before her:  a firehose of lukewarm, gushing water-words impossible to take in, and strangely mesmerizing. What’d she just say?? Still, the financial press widely appreciated moderate Yellen.

She exasperated Sen. Elizabeth Warren, who pressured her more than once. Most recently it was over the Wells Fargo frauds. That’s the other Federal Reserve mandate, to regulate the banking system. But then as Janet left, she gave two parting gifts to the country: one was a raise in the long-term Treasury bond rate to cool down an overheated market. The other was the first big-bank punishment of its kind for Wells Fargo, removing board members, along with some real structural changes to address its being overlarge. https://tinyurl.com/ycmlbvyl

Will Mr. Powell stay the course and enforce those penalties on WF? Those rising interest rates? The word is that Trump’s money-men want to further undo regulation, setting freer the already free market, making it a libertine. That hasn’t gone well in our near past. I’m nervous, seeing last week’s near 1600-point DOW drop last week, but generally agree with those like Yves Smith at Naked Capitalism,  who say it’s a needed correction for overvalued bubbles https://tinyurl.com/y8u7tud2.

But I also agree with those who warn this new volatility has less to do with interest rates, than with fears about US national stability. Wall Street on Parade writers, Pam Marten and Russ Marten, say that the stock market, which has shrugged off the President’s low approval rating at home, and a diminishing reputation for steady, credible world leadership, are fools to ignore Trump’s chaos. http://wallstreetonparade.com/2018/02/stock-market-panics-on-treasury-yields-fed-and-trumps-domestic-wars/

The whole world knows about the Republican tax gift to our richest, essentially gutting the government budget, weakening it further. We’re going to spend millions on a military parade, not on veterans health care, and money for ICE, not dreamers. About now, I am mentally writing steady Janet a note that says, Wish you were still here.

Nevertheless, She Persisted—

The Sung family is at the center of this stirring film that reveals much about the American banking system, and way too much about American justice. The fiesty Sung sisters run the savings bank founded by their father, competently serving a neighborhood of immigrant Chinese. When they catch and report an employee’s fraudulent loans, they soon find themselves being investigated; it becomes apparent to many that their whole community is being scapegoated. Wait until you see their chain gang arrest!

In fact, their Abacus Federal Savings Bank was the only U.S. bank indicted for mortgage fraud related to the 2008 financial crisis. The film asks why this tiny bank—2,651st largest in the country when it was brought to trial—had to fight to save its reputation, while the biggest bankers on Wall Street that brought us the 2008 meltdown never were charged with any wrongdoing. 

The Sung family’s answering courage marks them as true American underdogs, our favorite kind of heroes. Directed by filmmaker icon Steve James (Hoop Dreams, Life Itself, The Interrupters), Abacus aired on Frontline in Sept. 2017, (where you can still stream it) and just was nominated for a “best documentary” Oscar for 2018.

James told a Frontline interviewer that the story has relevance today, “given that no justice was ever brought….Not only were the big banks not prosecuted coming out of that crisis, they were not regulated in a way to ensure that we’re not going to have more of these problems.” We agree with James and Oscar, and highly recommend it in the spirit of "Nevertheless, she persisted!"

Rotten is Grrrrreat!

I had a stomach flu yesterday and got through it by binging on the best series I've seen in a long while. Yes, it's a Netflix documentary series, and yes, it's about our global food supply—like spinach, one reviewer wrote. But oh my, I felt like Popeye afterward!  It is so very engaging, relevant, and beautifully told. 

I learned details about global trade, and the financial-ization of our food.  Each of the five episodes had gripping stories at their heart: an horrendous chicken serial killer, bee thievery, a convicted restaurant no-nut murderer, tales of New England's Codfather, and international intrigues of organic garlic farmers and raw milk producers. These were not just painless, but illuminating, enlivened by real people who cared about things real people care about. You see in this series,  close-to-home picture of dairy farmers, chick-growers, fishing folk, and hive-keepers, issues that you and your family and neighbors talk about: our bees disappearing, our new food allergies and fears, cheap chicken, expensive seafood, and garlic in everything gourmet.

China and trade policy figure largely in this, but all is enlivened by people on all sides you can care about. One of my mother's concerns, which I write about in Screwnomics is "the little guy," the real heroes and heroines in this film series. You see in this that regardless of national boundaries, we little guys have much more in common with each other, than with the looming and freakishly overlarge financial powers moving in on all of us, globalizing our food chains, cheapening our work and our health in ways we can collectively address—but only with knowledge. This series provides us with that.  I highly recommend it.  

Whose Asset? Whose Debt?

You and I think of our loans as debts or a minus. But banks consider them an asset, a plus—as in money in the bank. The bank or creditor has gotten you to sign on the dotted line. You have promised to repay the borrowed money, plus more, with extra charges called interest added in. Whether mortgages, car loans, or student loans, these interest charges are paid upfront, with the principal, or money owed, barely touched. In that way, loans are worth a lot to the loaner

So here is something to keep you up at night. Wall Street has begun securitizing student loans, a phenomenon they have newly named SLABS (Student Loan Asset-Backed Securities). Ellen Brown has been writing about this extensively, and if you want the wonky details, read her at Common Dreams. https://tinyurl.com/y877wemWhy should you care? Do you remember the 2008 mortgage crisis that led to a global financial meltdown? Back then, Wall Street had securitized the nation’s mortgages to re-sell to investors. To securitize means to take an asset, like a bank’s mortgage loans, and through “financial engineering,” as Investopedia puts it, https://tinyurl.com/y7yskx78, transform those into a more liquid and fast-traded “asset-backed security.” An even bigger global Wall Street bank then sells them to big-time investors.

This financial re-engineering first began in the 1990s, hailed by Washington.Wall Street made so much new money that everyone tried to cash in on the nations’ bank assets, namely US  citizens’ debts. Real estate prices soared! Loans were easy! You remember what happened then? Fraud, subprime liar loans, and a huge crash, which citizens then bailed out with their taxes, rescuing the biggest banks, instead of letting them fail from their fraud and bad judgement.

So now with student debt liabilities amounting to $1.7 trillion for 44 million borrowers (the 2016 student average was over $37,000 each), says Forbes, ( https://tinyurl.com/y73pr83u )—are we seeing another crash in the making?  College tuitions, so necessary for any kind of survivable future,  may create assets and soaring numbers for Wall Street. But thinking of this unprecedented burden on an entire generation as an “asset” accrues only to the wealthiest few. For the many who face an indebted future of laying golden eggs for the SLABS omelet, their goose is already feeling cooked.  

Look for #unscrewed student debt stories in future.

Mortality is Universal but Health Care is Not—So Who Dies? When?

photo by John Dominis

Health Care is the issue that Americans keep naming as their top worry for pollsters. The latest survey found 48 percent saying so to the Associated Press-NORC Center for Public Affairs Research. We ranked it above taxes, the environment, and immigration, the other biggest priorities named. A US News & World Report article said the reason some people gave: costs are not getting any more manageable. https://tinyurl.com/ya9hqgg9

You think?

Despite Trump’s campaign promises of making health care “much less expensive and much better,” Trump’s cabinet and staff never proposed anything but repealing ObamaCare. Their “replace” part, half-baked in secret meetings of Republicans, ultimately resulted in a failed vote. But that didn’t stop Trump and his allies. The new tax bill scraps a mandate that makes the insurance pool more affordable and less sick—which he and syncophant Republican leaders count a victory thanks to his “exquisite leadership.”

Meanwhile, the Childrens Health Insurance Program has not been renewed and the White House canceled ACA insurer subsidies, creating market mayhem and premium jumps. Our progress in reducing the numbers of uninsured is over; their numbers and expensive emergency room medicine will only increase with a mandate repealed.

Apparently Congress failed to notice what its own government reported in early December. How long can we generally expect to live?  For the first time since 1993, when AIDs was a new plague, overall US life expectancy fell, particularly among people younger than 65! The National Center for Health Statistics (NCHS) tracks these numbers, the latest data from 2015. In the context of other developed nations that continue to see longevity increase, US health declines are very troubling. https://tinyurl.com/y9zurzr6

Investment in prevention could reduce our costs. In early November NCHS reported on the second year of increase in gun deaths https://tinyurl.com/y8v3fztv, our gun-toting ethos now even tolerating Trump’s “fire and fury” and threats of nuclear war. Did I mention our mental health?? The American Public Health Association lists as our top five health threats, climate change, environmental health, health equity, gun violence, and health reform. More than 40 people a day die of opioid overdoses, and it is not as if any of this despair and pain has a place to go without our uniting to care for all of us, come hell or high water.  https://www.apha.org/topics-and-issues

Big Gifts and Little Tokens

The day BEFORE the tax bill was completed by a Republican Congress, Wells Fargo’s CEO Tim Sloan told CNN Money their expected tax windfall would go to increased dividends for  shareholders and stock buybacks http://money.cnn.com/2017/12/18/news/economy/wells-fargo-taxes/index.html. But by the next day, while Republicans’ delivered fawning kudoes to the “exquisite” leadership of you-know-who, Wells Fargo (and other huge companies like AT&T, Comcast and Boeing) were promising bonuses and raises for workers, thanks to the wondrous tax reform. http://money.cnn.com/2017/12/20/news/companies/wells-fargo-bonuses-tax-cuts/index.html

We’d love to believe Wells Fargo’s CEO had misspoken, 'cause it sure did look greedy just before Christmas. Perhaps when the board saw CNN’s story and what their CEO said, they shouted NO! Be generous! Give our people bread! But more likely, given scandals and falling stock prices, raising their minimum wage to $15 is a public relations strategy. About 25,000 employees will be affected, getting a raise of $1.50 an hour, or $3,120 a year, assuming 40 hours/week. That's better than a sharp stick in the eye.

But consider that back in 2014, Tyrel Oats, a Wells Fargo customer service employee who earned $15/hour wrote to their then-CEO, John Stumpf. His letter pointed out the bank’s net income in its second quarter alone had been $5.7 billion. Oats suggested the bank improve its image by giving a $10,000 per year raise to ALL its employees, or an hourly raise of $4.71 per hour. He copied his letter  to 200,000 workers because unions aren’t allowed at the bank. https://www.huffingtonpost.com/2014/10/09/wells-fargo-email_n_5960072.html

That same year WF’s then-CEO John Stumpf had pulled in $19 million for his one-man job, 473 times more than their median employee, nevermind the low life minimum. That same year Citizens for Tax Justice reported that Wells-Fargo had received federal tax subsidies from us taxpayers worth $21.6 billion over the previous 5 years. And Stumpf's piss-poor job performance ultimately cost the bank in legal fines, plus earned him a public shellacking by US Sen. Elizabeth Warren and Congressional threats of shutting the bank down in 2016.

Sloan replaced Stumpf, but Wells Fargo's legal problems from cheating people—ranging from overcharging for insurance, overdraft fees, appraisals, and their actively targeting African Americans and Latinos for overpriced mortgages—has added up. In 2012 they paid out $6.5 million in fines for SEC charges of failing to disclose risks of securities they sold; in 2013 they paid $203 million to settle a suit with 24,000 Florida homeowners, and faced new alleged violations of an earlier agreement with 49 states attorneys. In 2015, they paid out $4 million for credit card violations, and in 2016, The Consumer Financial Protection Bureau issued a combined total of $185 million in fines for their 1.5 million notorious fake accounts and 500,000 unauthorized credit cards. Forbes Magazine reported that in 2017 alone, Wells Fargo’s legal troubles had cost them $1 billion. https://www.forbes.com/sites/maggiemcgrath/2017/10/13/legal-troubles-hit-wells-fargo-third-quarter-earnings/#107268a9358e

Wells-Fargo’s promise of raises for its lowest-paid, if kept, might cost them as much as $78 million, still a far cry from Oats’ suggested $3 billion in raises, and a tiny trickle from the gushing billions in that bank’s  polluted revenue stream—reported in 2016 at $88.3 billion. As CEO Tim Sloan (paid $12.8 million last year) told CNN Money on Dec. 20: Yes, the bank has “excess capital.” With this "Christmas gift" tax reform, they’ll soon have billions more.