Good morning. Among today’s items: A big election win for Republicans in Massachusetts, which could kill health care reform. China asks banks to ease up on the lending. And some good arguments on Obama’s proposed bank tax:
Don’t try it, banks! (Slate) Referring to the possibility that banks will mount a legal challenge to Obama’s proposed bank fee:
Let’s see if I have this right. The Federal Reserve deciding unilaterally, without public debate, to assume hundreds of billions of dollars of financial companies’ liabilities, spent hundreds of billions to buy mortgage-backed securities and potentially expose taxpayers to massive losses: That’s totally constitutional. Congress passing a law suggesting that a small portion of the bailed-out financial industry, which is still benefitting from massive government subsidies, pay a fee for running huge balance sheets: That’s unconstitutional.
Obama’s double-dealing bank tax (Wall Street Journal) People gripe about Goldman selling clients garbage and then shorting it, but what about the government’s two-faced approached?
Hark back a few months to the shadow play of the Obama bank stress tests. Crediting themselves with mending the crisis, President Obama and Treasury Secretary Tim Geithner ruled that banks were on a solid footing because private investors would provide fresh capital and banks would be free to book profits and earn their way out of trouble.
That was then. Today it’s politically convenient to bash banks for the very same profits, and to punish the very same investors with a new Obama bank tax. First, the government coaxes banks into buying back the government’s TARP stake (and therefore government’s share of future earnings). Then it turns around and helps itself to a chunk of those earnings anyway.
Hmmm. At least Goldman doesn’t tell you “We’re all in this together” and then sell you short (it just sells you short).
China tells banks to ease up on the lending (Marketplace Morning Report):
David Cohen is with Action Economics in Singapore:
DAVID COHEN: They want to ease off of the accelerator a little bit after implementing a rather aggressive stimulus package over the past year or so.
The fear is the feverish lending is creating asset bubbles and inflation, and a lot of loans that will never get paid back.
Society’s producers are under attack (Real Clear Markets)
It’s understandable that if a proprietor of a small business is concerned about his or her economic future, they are naturally more conservative with their capital and the manner with which that capital is deployed. It’s human nature.
If you believe your taxes will soon skyrocket under the cloak of redistribution, you conserve. If you believe that energy costs are about to increase due to specious legislation such as “Cap and Trade”, you hesitate to invest in plant and equipment. If you see a government beholden to labor unions and a President intent on “turning the country purple” with pending legislation such as the oddly named “Employee Free Choice Act”, you naturally have concerns over future labor costs.
Elizabeth Warren wants you to help win the consumer protection fight (New Deal 2.0)
The fate of the Consumer Financial Protection Agency will be the best way to follow the story moving forward because consumer products were the most abusive and because the CFPA has real muscle to stop those abuses. The CFPA would hire new cops and change the way big banks do business.
We have all worked hard to make the CFPA into a reality, and the next few weeks will determine whether our hard work will make a difference for families or whether families will lose once again.
Business is booming for big drug negotiators (NPR)
Chief Medical Officer Steve Miller says the company is in an economic sweet spot. With prescription demand rising, along with costs, he says someone needs to manage all of those pills and negotiate lower prices with producers. “Pharmacies [are] the No. 1 touch point in health care,” Miller says. “People use hospitals on average once a year. They use the pharmacy on average 11 times a year.”
Republican wins in Massachusetts. What does it mean for health care reform? (PBS NewsHour)
This Senate seat is of pivotal importance because before the special election, the Democrats controlled 58 seats in the U.S. Senate and there are two independents who caucus with them.
This 60-vote supermajority made it possible to prevent Republican attempts to filibuster health care reform, and Brown has pledged to vote against reform as the Senate prepares to pass a final version of the bill and send it to President Obama’s desk.
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