Ah, The Leaks that Shall Not Be Named (if you work for the US Government, at least) seem to have some amusing data on one of our banks here in the US. This is not new news – Assange mentioned this last month. But I like this piece on DealBook on who really is freaked out by this . . . turns out it is the government, again. I agree completely with the author – pretty much nothing that is dumped would surprise me or much of the public anymore. We know we got screwed . . . well, at least some of us have figured this out. The rest of the population seems to be preoccupied by . . . well, honestly I have no idea what the hell people are looking at anymore. Where is the collective rage? Why hasn’t Congress rammed serious regulation of the financial industry through in fear of a pitchfork-wielding constituency? Oh, right, Simon Johnson covered that . . .
All that aside, as the piece in DealBook points out this new dump of documents might shed some light on just how close the relationship between the financial industry and the government really is. If, as Johnson claims, the financial industry has more or less captured the government in a sort of quiet coup, there may well be evidence of this – such as clear instances of regulators ignoring evidence of illegal acts, or warning institutions to change their behaviors before the regulators were forced to act.
Who knows what is in the documents . . . but given the remarkable Officer Barbrady impression pulled by the SEC in the “flash crash” case, I have a feeling something ugly is in there. I just don’t believe the regulators are that blind, or that stupid . . .
But here’s what I am wondering – and I’ve not seen it raised yet: what if these documents contain evidence of the conscious manipulation of wheat pricing that triggered the 2008 global food price spike, and appears to be behind at least some of the current food price increases we are seeing. It is one thing to screw around with financial instruments until you collapse the economy . . . but it is entirely another to quite literally starve people to death for profit. It would be interesting to see if such behavior qualified as a crime against humanity. It damn well should.
This strikes me as especially pertinent because the document dump, by placing the documents in the public realm, makes them usable by various governments (including our own) in prosecutions of criminal acts. While the documents were illegally obtained, they were not obtained at the behest of the government (I think we can all agree that Assange and the US Government are not colluding on much of anything these days) and therefore may not be “fruit of the poisoned tree.” Would regulators/the Justice Department dare ignore evidence there for all to see? Would the ICC get involved? And how ugly would this get, if indeed there was evidence of collusion between the regulators and the financial institutions? Are the regulators liable for actions in commodities markets if they allowed manipulation to take place?
Tag: regulation
Hoping we are either stupid or uninformed . . .
A while back, I put up a post about how the US failure to pass climate legislation is screwing up the entire process at the global level. While the Chinese are enormously problematic, and the Indians are not much better, our domestic political scene’s inability to come to any sort of agreement on anything that might look like a climate bill makes us the single biggest obstacle to addressing emissions productively. What most people do not understand is that legislation is not the only way to control emissions here in the US. In 2007 the Supreme Court held that the Environmental Protection Agency not only could, but indeed had to treat greenhouse gas emissions as a pollutant under the Clean Air Act. Thus, we can control emissions via the regulations put forth by an agency of the executive branch, effectively cutting Congress out of the loop (unless they want to revoke or amend the Clean Air Act, and nobody seems to have the votes for that). Hey, that is what the Court said, and what the Court says is the law until Congress rewrites things or the Court reverses itself.
So when people start arguing that the EPA’s impending move to actually come into compliance with the law is something “dangerous”, “activist” or “unwarranted”, they are hoping that the reader/listener/viewer doesn’t know the history or legal background of the issue – and they would often be right. Certainly, that is the tactic of Mackubin Thomas Owens at the Washington Times, who in a recent Op-ed ignored this case, calling the possibility of controlling emissions through regulations a “ploy” and a “naked power grab by the EPA.” So, let’s review, shall we?
I have no doubt that this is a tactical effort on the part of the Obama administration to force some of those blocking real climate legislation to come to the table and negotiate something they can live with. However, I don’t think the term “ploy” applies here – this is not an effort by the executive to do some backroom deal, such as consolidating power executive power at the expense of the other branches (for studies in that, see the Nixon and Bush 43 presidencies). The president and his people surely know that regulation is a much weaker form of emissions control than is legislation. One need only read the Washington Times Op-ed to see why, as they argue “a constitutional perspective suggests that Congress, not unelected bureaucrats, should be setting U.S. policy.” Even with the backing of the court, it is much easier to argue against regulations (however legally empowered) created by the bureaucracy than it is to argue against a law passed by a majority (or, in the case of the Senate, a supermajority) of both houses and signed by the president. Let’s also remember that the rest of the world is watching us to see what we do – and likely will build off of our domestic legislation for any global agreement (to ensure we participate). Domestic regulation, especially if it is contested, will never work as a similar foundation, and it is entirely likely that the Senate would not ratify any agreement predicated on that regulation (2/3 of the Senate must vote to ratify). If we want a global deal that even beings to address our problems, then the EPA must be an intermediate step toward binding legislation.
Now, do agencies grab for power when they can? Of course they do. But in this case, the EPA laid back until the Supreme Court told them, in effect, they had the right to regulate greenhouse gases under the Clean Air Act. In fact, one could argue that once the Court placed greenhouse gases under the purview of the Clean Air Act, the EPA had no choice but to move toward regulating emissions lest it fall out of compliance with federal law. After all, the court found:
“EPA has offered no reasoned explanation for its refusal to decide whether greenhouse gases cause or contribute to climate change,” Justice John Paul Stevens wrote for the majority. The agency “identifies nothing suggesting that Congress meant to curtail EPA’s power to treat greenhouse gases as air pollutants”. . . The court majority said that the EPA clearly had the authority to regulate the emissions and that its “laundry list” of reasons for not doing so were not based in the law. (via Washington Post)
This is how politics, policy and the global environment intersect, folks – turns out those civics courses were a lot more important than we realized at the time, huh?