Tuesday, October 21, 2008


Raw Story - Congressman Dennis Kucinich (D-OH) has called for a probe into $70 billion worth of pay deals planned for employees of failed banking firms receiving government aid. Kucinich said that he was directing his staff to immediately probe Wall Street firms that have received any portion of the $700 billion bailout plan recently passed by Congress, in response to a recent report by The Guardian outlining the firms' dramatic drops in revenue, but not in executive compensation.That report showed that over $70 billion was to be allocated towards pay deals, including discretionary bonuses, at firms such as Goldman Sachs and Citigroup. "When Congress placed restrictions on excessive executive pay, it had no intention of permitting business as usual with respect to bonus structures," Kucinich said. "It would add insult to injury to ask taxpayers not only to bailout a firm, but to pay for bonuses as well. The Guardian's report necessitates an immediate inquiry."

Michael S. Barr And Gene Sperling, NY Times - It is not tenable to suggest that the Community Reinvestment Act, which was enacted more than 30 years ago, suddenly caused an explosion in bad subprime loans from 2002 to 2007. During the 1990s, enforcement under the reinvestment act was strong, prime lending to low-income communities increased and it was done safely. In 2000, a Federal Reserve report found that lending under the act was generally profitable and not overly risky.

By contrast, in the 2002 to 2007 period, the act's enforcement was weak and its advocates had little influence with Congress. In 2003, President Bush's chief thrift regulator - holding a chainsaw in his hands as a prop - boasted of his plans to cut banking regulations, including the scope of the reinvestment act and his enforcement staff, which he carried out over the next two years.

Instead, the bad subprime loans were predominantly made by financial firms not covered by the act. According to recent Fed data, 75 percent of higher-priced loans during the peak years of the subprime boom were made by independent mortgage firms and bank affiliates that were not covered by the act.

If the Community Reinvestment Act caused the subprime crisis, it is hard to make sense of why non-covered lenders drove the growth. These subprime lenders were competing with more responsible lending under the act by banks and thrifts. Their loans undid the work of community banks that had been making sound mortgage loans to creditworthy low- and moderate-income borrowers for years.

Dion Money Management - The Wall Street Journal recently reported that investors have lost $2 trillion in retirement assets over the 15 months. 65% of American workers 45 years and older now intend to delay their retirement, according to a September survey by the AARP.


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