Secret Goldman Sachs tapes show regulators still respect bankers too much

Secret Goldman Sachs tapes show regulators still respect bankers too much - The Washington Post

The problem with Wall Street's cops is that, before the crisis, they didn't actually fall asleep on the job.

Regulators
knew the big banks were taking big risks, and had the power to do
something about it. But they didn't. It's worse than outright neglect,
since it's not as obvious how to fix it. And now, thanks to 46 hours of secret audio tapes
from inside the New York Federal Reserve, we can hear that they're
still having trouble fixing it. The problem isn't that regulators don't
have the tools they need. It's that they won't use the tools they have,
because they respect the bankers too much.

...

This is where you need to go to This American Life, who, in conjunction with Jake Bernstein
of ProPublica, put together the highlights of Segarra's 46 hours of
audio recordings. You have to hear how obsequious the supervisors sound
when they talk to Goldman's executives, almost apologetic for not-quite
doing their jobs. The best example of this came during a deal between
Goldman and the Spanish banking behemoth Banco Santander in 2012. "We're
looking at a transaction that's legal but shady," Segarra's boss Mike
Silva said, and "I want to put a big shot across their bow on that."
Specifically, Goldman was making it look like it was taking assets from
Santander without really doing so — for a fee, of course — all so
Santader could avoid having to raise more capital. This was regulatory
arbitrage of the worst kind: It was potentially destabilizing. But the
term sheet said the deal wouldn't go ahead unless the New York Fed
explicitly signed off on it. Until, that is, Goldman just went ahead
without it.

...

Americans Continue to Say a Third Political Party Is Needed

Americans Continue to Say a Third Political Party Is Needed - Gallup

A majority of U.S. adults, 58%, say a third U.S. political party is
needed because the Republican and Democratic parties "do such a poor
job" representing the American people. These views are little changed
from last year's high. Since 2007, a majority has typically called for a third party.

The results are based on Gallup's Sept. 4-7 Governance poll. The
first time the question was asked in 2003, a majority of Americans
believed the two major parties were adequately representing the U.S.
public, which is the only time this has been the case. Since 2007, a
majority has said a third party is needed, with two exceptions occurring
in the fall of the 2008 and 2012 presidential election years.


The historical 60% high favoring a third party came in a poll
conducted during the partial federal government shutdown last October.
At that time, 26% of Americans said the parties were doing an adequate
job. That figure is up to 35% now, but with little change in the
percentage calling for a third party.


Americans' current desire for a third party is consistent with their generally negative views of both the Republican and Democratic parties,
with only about four in 10 viewing each positively. Americans' views
toward the two major parties have been tepid for much of the last
decade. However, even when the party's images were more positive in the
past, including majority favorability for the Democrats throughout 2007
and favorability for the GOP approaching 50% in 2011, Americans' still
saw the need for a third party.


Independents Maintain Solid Preference for Third Party


Political independents, as might be expected given a lack of
allegiance to either major party, have shown a far greater preference
for a third political party than those who identify as Republicans or
Democrats. Currently, 71% of independents say a third party is needed,
on the upper end of the trend line. That compares with 47% of Democrats
and 46% of Republicans who say the same.

For most of the past 11 years, Republicans and Democrats were about
equally as likely to favor a third party. From 2003 to 2006 -- when
Republicans had control of the presidency and both houses of Congress --
Democrats were more likely than Republicans to see the need for a third
party. And in 2011, after the rise of the Tea Party movement,
Republicans were a bit more inclined than Democrats to see a third party
as necessary.


Implications


Although Americans express a desire for a viable alternative to the
Democratic and Republican parties, third political parties have had
little success in American politics. The U.S. political system makes it
difficult for third parties to hold elected office given the Electoral
College system of electing presidents and election of members of
Congress from individual states and districts based on the candidate
getting the most votes. Such a system generally favors two parties -- a
center-right and a center-left party -- that have the ability to
assemble a winning plurality or majority in districts and states across
the country. Also, some states have restrictive laws on ballot access
that make it difficult for third-party candidates to appear on the
ballot.


Third parties have had success in other countries when they had
strong support in a particular region, or if members of the legislature
were allocated proportionately to the nationwide vote each party
received. This allowed third parties to hold seats with national vote
shares usually well less than 30%.


Given the U.S. political system, those whose ideology puts them to
the left of the Democratic Party or the right of the Republican Party
are better served trying to work within a major political party than
establishing their own party. Supporters of the Tea Party movement
generally took this approach, with some success, by trying to get their
preferred candidates nominated as Republicans in the last few election
cycles. But as with most U.S. third parties historically, the Tea
Party's influence appears to be waning as the movement did not play a
pivotal role in the 2012 Republican presidential nomination and was less
successful in defeating more moderate Republican candidates in the 2014
congressional primaries than in 2010.


Though the desire for a third party exists, it is unclear how many
Americans would actually support a third party if it came to be.
Americans' preference for a third party may reflect their frustration
with the way the Republican and Democratic parties are performing, as
well as the idea that the system ought to be open to new parties,
regardless of whether this is viable in practice.

The Recovery That Left Out Almost Everybody

The Recovery That Left Out Almost Everybody - WSJ -Yahoo Finance

According to a Pew Research
Center report released this month, only 21% rate current conditions as
excellent or good, versus 79% fair or poor. Only 33% say that jobs are
readily available in their communities; when asked about good jobs, that
figure falls to 26%. Only 22% believe the economy will be better a year
from now; 22% think it will be worse, while fully 54% think it will be
the same.

More than five years after the
official end of the recession, the Public Religion Research Institute
finds, only 21% of Americans believe the recession has ended.

Two recent reports help explain
the disconnect between the official jobs numbers and the economic
experience of most Americans. Every fall, the U.S. Commerce Department
issues a detailed analysis of trends in income, poverty and health
insurance. Although economists have some technical quibbles with the
Commerce data, the broad trends are unmistakable.

This year's report found that
median household income was $51,939 in 2013, 8% lower than in 2007, the
last year before the recession. Households in the middle of the income
distribution earned about $4,500 less last year than they had six years
earlier. No wonder 56% of Americans told the Pew Research Center that
their incomes were falling behind the cost of living.

The Federal Reserve's triennial
Survey of Consumer Finances confirms these findings. Between 2010 and
2013, the Fed reports, median family income fell by 5%, even though
average family income rose by 4%. This is, note the authors, "consistent
with increasing income concentration during this period." Only families
in the top 10%, with annual incomes averaging nearly $400,000, saw
gains during these three years. Families headed by college graduates
eked out a gain of 1%, while those with a high-school diploma or less
saw declines of about 7%. Those in the middle—with some postsecondary
education—did the worst: From 2010 to 2013, their annual incomes
declined to less than $41,000 from $46,000—an 11% plunge. Families
headed by workers under age 35 have done especially badly—even when the
heads of those young families have college degrees. The economic
struggles of the millennials are more than anecdotal.

What's going on? The Census
report offers a clue. The median earnings for Americans working
full-time year round haven't changed much since 2007. But more than five
years into the recovery, there are fewer such workers than before the
recession. In 2007, 108.6 million Americans were working full time,
year-round; in 2013 only 105.9 million were doing so. Although jobs are
being created, too many of them are part-time to maintain growth in
household incomes.

This is not by choice. About
the same number of Americans were employed last month as in December
2007. But during that period, according to the Bureau of Labor
Statistics, the number of Americans working part time who wanted a
full-time job jumped to 7.2 million from 4.6 million. Not only are
hourly wages stagnating; America's families want more hours of work than
the economy is providing.

Although the Great Recession
was the most severe since World War II, in many ways it underscored
trends that have been under way for decades. Adjusted for inflation,
median earnings of men working full time, year-round are no higher than
they were in 1980. Median household income is almost $5,000 lower than
it was in 1999, and no higher than it was it 1989.

The modest income increases of
the past two generations have occurred because women have surged into
the paid workforce—and because their real wages have grown at a compound
annual rate of 0.8%. But both these trends peaked in 2000. Not
surprisingly, the years after the 2001 recession witnessed the only
postwar recovery in which median incomes failed to regain their previous
peak.