Dave Dayen: Yes, Katrina, Wall Street Won Again, and Progressives Need to Face Up to That

Yves here. I hope you are as excited as I am that Dave Dayen will be posting at NC when the mood strikes him. Welcome Dave!

By David Dayen, a lapsed blogger, now a freelance writer based in Los Angeles, CA. Follow him on Twitter @ddayen

Greetings, NC readers! Yves has been nice enough to open up her Internet home to me, and I intend to grab the opportunity from time to time.

This offer turned fortuitous after I wrote a little piece from Salon on the “anniversary” of the securitization fraud task force, announced at last year’s State of the Union address. The scare quotes are warranted because, as I detailed, it’s hard to honor an anniversary of something that never really existed in the first place. I don’t remember annual celebrations of the founding of Atlantis, either.

Well, Katrina vanden Heuvel, editor and publisher of The Nation, got very upset at my characterization of the task force, and scolded me for taking a “victory lap.” I could spend this entire refutation on the revealing attitude behind that phrase. I would have been extremely happy to have been completely wrong about this whole matter if it meant that even one homeowner would get a measure of justice for what they’ve encountered. I don’t tally up my punditry on a whiteboard and seek out the showiest opportunities to boast about my scores.

But maybe I should tally up vanden Heuvel’s scores in this case. Because I don’t think she should continue engaging in this debate without a working knowledge of the underlying issues. Consider this opening:

The task force, co-chaired by New York Attorney General Eric Schneiderman, was something I applauded last January along with many progressives, who view it as a path to justice and relief for homeowners. We support it because it is vital that the mortgage servicers, lenders and big banks that dragged millions of Americans into foreclosure be held accountable. That was true then, and it’s true today.

Mortgage servicers and lenders, of course, have nothing to fear from the task force, since it’s ostensibly focused on securitization issues – hence the name “Residential Mortgage Backed Securities Working Group.” Servicers and lenders have already been released from liability with the foreclosure fraud settlement. I actually never saw the case for getting from findings of fraud on securitization, which did harm to investors, to relief for a completely different abused class of homeowners. At best it would represent an odd sleight-of-hand, at worst a perversion of justice. If you wanted to give homeowners relief, you shouldn’t have waived liability on the conduct that most directly affected them.

The lack of basic knowledge about the subject continues in this fashion. Vanden Heuvel claims that “Many are frustrated that the cases brought so far by the task force, against Bear Stearns and Credit Suisse, were in civil court, not criminal,” which is not the full story. In reality, the Bear Stearns and Credit Suisse cases are galling because they’re just rewrites of private litigation that could have been brought to court two years ago. In fact, the model for the Bear case was written by Karla Sanchez, then a lawyer for the mortgage bond insurer Ambac, who in early 2011 went to work for Eric Schneiderman. The New York AG didn’t need a task force enacted so he could walk down the hall and ask Karla Sanchez for a copy of her lawsuit to crib from. (Vanden Heuvel calls this a “creative case”; I agree that getting people like her to think this is new litigation when it’s just taken from a patchwork of old cases is creative!)

Let’s examine vanden Heuvel’s “real solutions” that she thinks can come out of this accountability-free mess, with another year passed since the crisis and another year of fraud consumed by the statute of limitations. She takes the typical DC progressive stances here. 1) it’s all the Justice Department’s fault, and we “need an investigation” to get to the bottom of the obstruction. Maybe Eric Schneiderman can get on a task force with the DoJ leadership and look into it. Then we have 2) the “Ed DeMarco triple-somersault with a twist” maneuver:

Second, the Obama administration has allowed a steady “drip” of minor cases and settlements to move forward against the banks without any coordination across agencies, rather than trying to maximize justice –- and settlement money –- for homeowners. These include cases brought by the Federal Housing Financing Agency (FHFA), which is notoriously soft on mortgage servicers.

It’s been nearly four months since Obama promised to replace Ed DeMarco, head of FHFA, who remains the administration’s biggest impediment to help for underwater homeowners. (See my column from last spring, “The Man Blocking America’s Recovery.”) The president now has no excuse to wait, not with qualified candidates in line for the job and the hardest-hit still waiting for relief four months on.

If vanden Heuvel actually attempted an argument connecting the task force to the federal conservator for Fannie Mae and Freddie Mac, I missed it. But DeMarco has been the convenient scapegoat for those who don’t examine these issues too thoroughly, so his name gets invariably tossed out there. This is ridiculous for several reasons. One, if there’s any agency in the federal government who actually has a record of trying to extract sums of real value from the banks for their conduct, particularly with respect to securitization, it’s FHFA, whose lawsuit against 17 banks over misrepresentations of mortgage-backed securities could net hundreds of billions of dollars. The fact that DeMarco is “soft on mortgage servicers” is irrelevant in relation to a fraud task force that has nothing to do with servicing.

Also, the President actually has an excuse at this point. The DC Circuit court effectively ended inter-session recess appointments, at least until the Supreme Court clears up the matter. So even if Obama fired DeMarco, they would not be able to replace him through that means. That leaves the options of replacing DeMarco with deputies of like minds, or a highly unlikely Senate confirmation (see the troubles with getting a CFPB Director through). Meanwhile, it’s amusing to have vanden Heuvel admit the Administration lied to her AGAIN before the election, by promising they would rid FHFA of DeMarco, only to do nothing. Somehow, the presumption of good faith remains.

Vanden Heuvel closes by linking to reporting from The Nation that’s five months old and actually says nothing about targets of the task force, as she claims. My favorite statement of hers about the potential value of the task force is when she says it has a significant “pending congressional appropriation.” A pending appropriation! Because everyone knows that in an age of sequestration, where every federal line item is due for a 6% haircut in a couple weeks, this is the perfect time for new congressional appropriations to take root! Just ask the House Republicans!

I suspect she’s really upset because of this:

Dayen blames groups like the Campaign for a Fair Settlement, the New Bottom Line, Move On and the Campaign for America’s Future (disclosure: I’m on its board) for buying in to the plot. In reality, though, these organizations have been pressuring the Obama administration for months to clean house at Justice, devote real resources to the task force and make it a top priority inside the White House.

Emphasis mine. And I’m sure the Administration trembles at the pressuring from the groups that sent out glowing press releases a year ago about the “real leadership” shown by the President in announcing a task force that, by this own admission, carried no guarantee of resources or prioritization.

Look, nobody likes having to admit they’ve been duped. But I reject the assertion that there are only two courses of action here, that “we can either fight to see that this investigation is real or we can take our ball and go home.” That fight over the investigation is doomed. What would be useful is to examine the role of these DC progressive groups, who continue to build coalitions aimed at “pressuring” the White House and who continue to fail in spectacular fashion.

Well-meaning people all over this country concerned about any number of issues hand over their hard-earned money to these groups, and they aim to speak broadly for liberal values. The accountability doesn’t stop on Wall Street. It needs to be shared by the DC progressive community. I’ve gotten enough correspondence in the wake of my Salon piece to know that the majority of them now believe they were fooled, vanden Heuvel’s bravado notwithstanding. It would be incredibly worthwhile to exercise some self-examination at this point, to question the entire value of building these ad hoc organizations at the edges of the halls of power, and then working through polite channels and gentle nudges to get as much progress as possible, as long as it doesn’t disrupt being able to sit in on meetings with senior Administration officials and the like.

We talk a lot about broken models. The DC progressive model is broken. It does nothing but facilitate the injustices readily evident in this case. A good use of time at the next board meeting would consist of a moment of self-examination, and maybe entertaining a motion for dissolution. Those of us demanding justice and accountability will always have to fight for it, and maybe next time we could use some colleagues with more than a squirt gun.

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  1. fresno dan

    Look, we have two teams.
    Red team bad.
    Blue team good….
    Cause red team is bad…blue team must be good…right?

    1. sgt_doom

      Well, Katrina vanden Heuvel, editor and publisher of The Nation, got very upset at my characterization of the task force, and scolded me for taking a “victory lap.”

      One must agree with GS on this, Katrina is such a fraud and farce, always taking the vanilla route, worshipping the status quo but then her family ties to the Kissinger and the International Rescue Committee should be well known to all by this late date.

      And the murky history of that publication when they fired the real progessives there many, many years back, should have been a giant red flag to everyone!

  2. Goin' South

    Great to see your writing and investigative work at NC! FDL readers miss you greatly.

    One quibble with this post: Duchess vanden Heuvel was not duped. She is miffed that you are interfering with her efforts to dupe us.

  3. Thorstein

    Welcome, Dave! We were truly afraid your voice might disappear, and we’re elated to have it here on Naked Capitalism!

    I’m probably grasping at straws, but methinks I see signs of life in the Democratic congressional delegation. For the last four years they’ve been stuck with Obama. Now many of them can see Obama and his policies as a liability going into the 2014 and 2016 elections and either distance themselves from those policies and/or force changes. The Begich-Deutch bills will be an interesting test of this hypothesis. Unlike Katrina and the many other self-satisfying “lobbyists” inside the beltway, the elected representatives (or at least some of them) have to concern themselves with re-election. Glad you’ll still be watching them for us.

    1. tom allen

      Most of the members of Congress get heaps of campaign funds from finance, insurance, and real estate. Why on earth would they do anything but posture like Obama? Especially when they can say, “My Republican opponent would be worse!” — and rake in votes from progressives. Unfortunately, nothing will change until the system collapses again. And possibly not even then.

      On the bright side, it’s great to see David’s work here! Another pointed and thoughtful piece.

    2. Francois T

      ” Now many of them can see Obama and his policies as a liability going into the 2014 and 2016 elections”

      It would be so if the Republicans decided that a populist agenda is the way to go for them (They’d be right BTW!) Alas, they’re married to the 0.001% more than anybody else, so, Obysmal is absolutely free to cater to the uber-wealthy as much as he wishes. Please, also remember 2010 mid-term elections: despite desperate pleas from Congressional Democrats, Obama and his cadres just couldn’t be bothered by trivialities such as keeping the House in their camp.

      In a sense, Obama owe a lot of what he has now to 3 important factors:

      1) the Republicans scorching Earth strategy; it forced the Democrats to an abject submission to Party discipline up to a degree never seen before for them.

      2) Ditto for the relentless attacks of the conservatard loonies of the right wing nut jobs, that the MSM enables at every turn.

      3) The sheer extremism of the GOP. I mean come on! Wanting to re-litigate CONTRACEPTION?? “Legitimate rape” anyone?

      1. Brooklin Bridge

        It’s very unlikely that there is any coincidence between what Obama’s got now and #3, or any of the items for that matter, on your list – at least any more than the actors’ parts in any scam are coincidental.

  4. voislav

    It’s funny how the discussion if always framed as if the Administration is acting in good faith but are continuosly foiled by their adversaries or the circumstances. Big Pharma is too powerful, Big Banks are too important, John Baynard has superhuman negotiating skills.

    1. sgt_doom

      Exactly, good citizen! And James A. Johnson was too powerful, or was he just another well paid lackey:


      In the 2011 book Reckless Endangerment: How Outsized Ambition, Greed and Corruption Led to Economic Armageddon, authors Gretchen Morgenson and Joshua Rosner wrote that Johnson was one of the key figures responsible for the late-2000s financial crisis. Morgenson described him in an NPR interview as “corporate America’s founding father of regulation manipulation”.[7] Also according to Morgenson, he changed Fannie’s executive compensation plan to be based on volume not quality and earned over $200 Million dollars while working at Fannie Mae.

    1. Ms G

      That is a good idea LS, especially given that it could have turned into a S**t cruise in more ways than one. Is Nation’s junket booked with Carnival?

  5. jake chase

    Well done. I stopped reading The Nation about 20 years ago, when it became pretty much the same tired crap turned out by the NYT, but on a lower grade of paper.

    For years I have felt that Progressive Democrats are our biggest problem because they have no will to fight, only an urge to ingratiate themselves to power by conciliating at every opportunity. This allows them to gratify egotistical impulses while never missing a meal or suffering exclusion from elite gatherings, at which they can exchange pleasantries with reactionary bullies who continually manage simple end runs around whatever timid initiatives they manage to incubate.

    To this day they believe WJC and BHO were forces for positive good. What can you expect from people like that?

    1. Brindle

      The model of WJC & BHO is to give progressives scraps as far as movement on ethnic and LGBT issues, but be full bore in favor in the targeting of the general population by rent extraction and asset harvesting, gilded by the Leaders draping of the crimes in an Orwellian mantra of “forward” “change” etc.

    2. subgenius

      Any framing of any question/response involving politics/economics/social mores/etc that indicates a belief that “part X” of the current set-up is the major problem is simply a failure of framing.

      The problem IS the system. The solution is too far out for most people to contemplate, involving as it does the need to stop using fossil fuels NOW, redistribute “wealth” equitably and devise an entirely new cultural paradigm. But you cant sell it to the masses. They simply WON’T vote against their selfish interests.

      1. diptherio

        To be fair, I don’t know of any mass social change that has happened like you describe, i.e. as a result of reason, thought and planning. In general, it seems like sh*t just kind of happens…

      2. different clue

        What selfish interests do the masses currently have a selfish interest in?

        How would your selfish interests be served by the changes you advocate?

        How would you convince the masses that your selfish interest is really their selfish interest too?

        1. subgenius

          selfish interests of the masses?

          -use of fossil fuels
          -demand for private vehicles
          -demand for cheap meat products
          -demand for large individual living spaces
          -lack of global equity/equality
          -etc etc etc

          my interests would be damaged, just like everybody else in at least the developed world…

          1. different clue

            If you ( or me or we) want the masses to vote against the selfish interests they have now, you we me have to offer them a different set of better selfish interests to vote for instead.
            And since current living patterns are locked into place with people locked into those patterns thanks to 60 or so years of social and infrastructure engineering, we can’t stop doing these things NOW. We will have to stop doing these things in steps over time as we build better things to be doing instead.
            People want private vehicles now because a decades-long program of mass-extermination of mass-transit has left people with no way to get around except with private vehicles. So demonstrate making mass transit user friendly and effective where vestiges of it still exist as models and examples for people without it to aspire to, for example. And for short distances, make cities/towns/etc. more bicycle safe and bicycle friendly so that the Private Vehicles people want can be bicycles more and more.
            That kind of thinking across all these areas could get us from “here” to “there” maybe.

      3. jake chase

        Well, we could all become Amish. Would that do it? Or do some own more land than others?

        Don’t worry about fossil fuels. They’ll be gone in 100 years, or else all the people will be gone and that remaining 2/5 of the Earth formerly covered by Gary Mathews will be under water.

  6. seabos84

    You could have written this about the Washington Education Association (WEA). I’ve been ‘active’ for 4 years, started teaching 8 years ago. I go to meetings randomly, and consistently I hear bleating from senior people how we have to accommodate and compromise and be moderate with Sauron’s Ringwraiths, or, they’ll lie about us and we’ll lose !!
    Kind of like the DLC Blue Dog New Dem Turd Way sell outs who’ve been chasing the goalposts further right for decades!
    Ooops! silly moi! it isn’t Sauron in Mordor, it is Gate$ in Gate$-ILL-Vain-IA and his servile, credentialed, titled toadies whipping up great teacher bashing soundbites. (See Dianne Ravitch’s Blog…)

    1. from Mexico

      PR Watch published a fascinating communiqué by Ron Duchin, who served as president of Mongoven, Biscoe & Duchin (MDB,) a Washington D.C. public affairs firm specializing “in issues management and the motivation behind activist movements.”

      Duchin graduated from the US Army War College and served as special assistant to the Secretary of Defense. He is listed in the Association of Former Intelligence Officers.

      “In 1991 he gave a speech to the US National Cattlemen’s Association describing how MBD works to divide and conquer activist movements. Duchin claims that activists fall into four categories: radicals, opportunists, idealists and realists, and that a three-step strategy was needed to bring them down.

      “FIRST, YOU ISOLATE THE RADICALS – those who want to change the system and promote social justice. “Second, you carefully ‘cultivate’ the idealists: those who are altruistic, don’t stand to gain from their activism, and are not as extreme in their methods and objectives as the radicals. You do this by gently persuading them that their advocacy has negative consequences for some groups, thus transforming them into realists.”

      “Finally, you co-opt the realists (the pragmatic incrementalists willing to work within the system) into compromise.”


      1. Jackrabbit

        Insightful info from Mexico.

        ‘They’ know what they are doing. And these profession ‘fixers’ are very good at it.

        God Bless America! Where you ‘vote’ with your money.

        1. Nathanael

          Thanks to “from Mexico” for this quote.

          Of course Duchin/MBD has described effective SHORT TERM method of neutralizing dissent.

          The trouble for the elite is this: that procedure, *because it fails to reform the system*, creates more activists.

          People who never previously thought the system was a problem become realists or radicals.

          The altruists eventually get frustrated seeing nothing get done… and become radicals.

          The realists notice that compromising has made them no progress and they have actually going backwards… and become radicals.

          Eventually, there are so many radicals that the opportunists decide that the radical side is the advantageous side!

          And then you get the French Revolution.

          So, this particular method, by preventing reform of the system, is extremely good at creating the sort of bloody revolutions in which the elite are killed, or at least have all their property confiscated.

          In contrast, the *CORRECT* method for elites to deal with reform movements is what I call the “Earl Grey” method: when people get too frustrated, *actually give them some reform*. Not much, but some. Then everyone quiets down again. Repeat as needed. Use of this method has kept the descendants of the British nobility rich and comfortable for centuries, while most other nobility were executed and had all their property taken.

          1. jake chase

            Today’s loot driven elite doesn’t seem very pragmatic, but I believe it is convinced that the masses lack the energy of eighteenth century French proletarians. And of course they have the drugs of television, sports, promiscuity, education, gambling, celebrity, etc., as well as overwhelming military superiority, which is why the only thing they really fear is ‘terrorism’, and rightly so.

          2. from Mexico

            @ Nathanael

            I agree. As Hannah Arendt put it in “Lying in Politics,” they beleive “that politics is but a variety of public relations,” and they are “taken in by all the bizarre psychological premises underlying this belief.”

      2. Klassy!

        Okay, you win today’s “things are always worse than you suspect” award.
        There is no cash prize, btw.

      3. two beers

        Thank you for this.

        It has been apparent to me for years that DC is following a specific and methodical plan to marginalize the left, but this is the best clue I’ve seen to what might consititute the actual plan.

        1. Nathanael

          As I noted above, this plan is an incredibly stupid plan, as it is a plan which works in the short run, but in the long run *radicalizes* people until a revolution happens. If the elite are really following *this* plan, we *will* see heads on pikes.

          1. jrs

            The elite seem incredibly dumb, and/or planning to rule by pure tyranny (but has that ever lasted long term?). What even is it to them if Social Security is preserved or not, nothing really, it doesn’t mean they stop being rich, SS is not exactly a threat to capitalism, but the elite become obsessed with discontinuing it, like they want to bring on a class war.

      4. Brooklin Bridge

        The problem with rank cynicism today is it always turns out to be just another form of naivete regarding how bad it really is.

      5. Montanamaven

        Thank you to David D. The creator and writers of “House of Cards, the original Netflix production only available by streaming on to your computer, I pad or TV thru Netflix must have read this or know this firm because this is the first serious treatment of what really goes on in Washington and not some fantasy like “The West Wing”. Also the do-gooder progressive non-profit “Clean Water Initiative” is run by the lead character’s wife. He’s the Democratic Majority Whip. Watch how this non-profit (ha ha) is used for various power plays by this power couple. I have never seen a devastating portrayal of “progressive” politics and groups on the TV. And it is heartening to see Dayen calling it out in polite society and with such detail and passion.

  7. Brindle

    NC just got better, and it was very good before adding DD to the roster.

    “gentle nudges” is the motor of the DC Progressives “success”–about as energetic as a couch potato hamster on a rusty wheel.

  8. Ms G

    Welcome Dave Dayen — it is so great to have you at NC and starting off what I hope will be regular visiting schedule with this maiden post about Queen Katrina and her very basic ignorance of facts upn which she expatiates loftily and propagandistically!

  9. Jay

    It’s funny that when the Obama administration asked for, and did not receive funds from Congress for the Catfood Commission, the WH used general funds for their secret meetings.

    But the Fraud Task Force awaits “congressional appropriation.”

    1. Kokuanani

      Have you seen that the Catfood Commission is back from the dead?

      S-B apparently has a NEW proposal [MORE catfood].

      Reuters referred to them as “deficit experts” http://www.reuters.com/article/2013/02/19/us-usa-obama-deficits-idUSBRE91I0P820130219?feedType=RSS&feedName=businessNews

      This is what happens when you don’t drive a stake through the hearts [sic] of these fuckers.

      I hope folks will hop over to the Reuters article and make nasty – er, insightful — comments.

  10. Susan

    “The DC progressive model is broken. It does nothing but facilitate the injustices readily evident in this case. A good use of time at the next board meeting would consist of a moment of self-examination, and maybe entertaining a motion for dissolution.”

    Bravo! After years of operating a small arts nonprofit that was wrangled and twisted hither and yon by one of the largest community foundations in America, I began to look very closely at nonprofit board governance. My conclusion is that this charity network of nonprofits is perhaps worse than the forprofit sector or at least as lameass. Members of the community (climbers and dogooders) wear their board appointments as lapel pins – they don’t read budgets, they don’t know how to provide oversight, they are volunteer donors full stop. When it comes to governance they have no idea, and they don’t want to know. Many never attend a meeting – just namedropping window dressing to appease funders. So they pat themselves on the back day in and day out for pulling the drowning puppies out of the river. They are so busy dragging drowning puppy nets that they never lift their heads to walk upstream and see who is pushing the puppies in.

    As the social saftey net shrinks to gauze/cheescloth more and more of them will grab their ankles to get a dollar for their programs from the foundation community or a corporation whose very business it is to undermine the efforts of said nonprofit. (See the rise of cause related marketing.)

    But the economy NEEDS these white collar dogooder jobs and so with little to no oversight as to how they operate, mission creep proceeding like a bullet train, the nonprofit sector keeps part of the economy ticking along.

    Cry foul, and the rest of the bored (misspeling intended) bursts into a rousing chorus of “Sit down you’re rocking the boat!”

    I can’t tell you how pleased I was to read your suggestion of dissolution in digital print. Absolutely!

    1. David Petraitis

      “…they pat themselves on the back day in and day out for pulling the drowning puppies out of the river. They are so busy dragging drowning puppy nets that they never lift their heads to walk upstream and see who is pushing the puppies in.”

      Great image, I’ll remember that one! Drowning puppy nets indeed!

      Welcome Dave, and nice to have your voice here, was missing you at FDL.

      1. Klassy!

        Oh yes, that is so wonderfully put.
        Useful corrolary: When I feed the poor, they call me a saint. When I ask why the poor are hungry, they call me a communist.

        1. diptherio

          Agreed, the puppy line is great. Humor makes for potent political commentary.

          As for saints and commies; I’ve only met one verifiable saint, my guru Kali Baba, and he’s, well…not you’re average saint.

          When we decided to build a community school, Baba wanted it to go on a scenic hilltop next to his Ashram. We polled the community and they agreed to the location. Then someone reminded us that the military used the hill for training exercises occasionally and probably wouldn’t grant us permission. Even if they did, we would probably have to pay a large bribe for the requisite signatures.

          Baba’s response? “Janta janaardan,” meaning approximately “will of the people.” The community had spoken: they wanted a school and if the military didn’t like it that was too damn bad! We started construction, while the nay-sayers muttered about this not ending well.

          A few months after construction was finished, but before classes had started, the military showed up for their scheduled exercises and found their hilltop already occupied. Their response? They donated all of our tables and chairs and held a special ceremony to thank Baba!

          Score one for the anarchist saint.

      1. Jackrabbit

        FYI: public budget “realities” eventually leading to sale of crucial public infrastructure to private interests that charge much more than it would have if government had retained the infrastructure.

  11. steelhead23

    Obama’s screwing of the middle class is something the liberal establishment simply cannot accept. It must be Congress. Or he has been deceived by his own Cabinet. Or, well you make up the excuse. It simply could not be that our first black president would be an elitist. It cannot be that we (many, many of us right here on NC) were duped. “Maybe if we just cajole him enough, stand behind him and he will stand up, it just has to work.” No it doesn’t Katrina. It is what it is. If it walks like a duck… Obama is a sycophantic elitist. I am tempted to say ‘House N-word’ but I feel certain that would offend our host – but its much more apt than I would wish.

    And you know what? This is exactly what we are going to get as long as corporate money selects our contestants. The greatest threat to American democracy is not the massive financial crimes of the banks – it is the crime perpetrated on democracy by our SOTUS in the Citizen’s United case, all for the illusion of freedom. Perhaps we could get an update on Feingold’s effort in this regard.

    1. Mel

      I hesitate to speak, I’m not from there, but: What would it take to get into your state primary conventions and make them improve the quality of the candidates they anoint? Or if that can’t be done, to anoint new candidates who are better?

      1. steelhead23

        The U.S. enjoys a two-party system. Both parties are primarily supported by the wealthy. The two-party system is entrenched. Third party candidates have been assigned the role of spoiler and aren’t allowed to participate in debates, are afforded scant media coverage and face an intense “why waste your vote” campaign to encourage people to accept the two-party system. In effect, Americans are afforded choices without a meaningful difference. Oh sure, Obama is different from Mitt Romney. He’s black.

        1. Mel

          Yeah. From the first draft I edited out “Occupy the Primaries”, but seems like just using them the way they were once set up to be used would amount to Occupation. ISTR The Archdruid wrote one, maybe a couple of months ago, on the way that local political organizations were shoved out of the way.

  12. Francois T

    DC progressive means “aligned with the Establishment”.

    In these extraordinarily turbulent times, when innovative solutions are needed more than ever, the Establishment cannot be anything, but the problem.

    J’ai dit!

  13. CB

    So seductive: in with the in crowd, one of the players. Gets ’em every time. And I have to tell you, every time Van Jones shows up, “environmental advocate, civil rights activist,” I know there’s a dog and pony show on. Not interested. Just distractions and diversions, folks. The real action was settled on before these wannabes even got their scripts.

  14. JohnnyGL


    Nice addition to the NC team. After Dayen left FDL, it almost HAD to happen! Having Stoller and Dayen to bring in off the bench for the political coverage is huge.

  15. sk

    “Yes, Katrina, Wall Street Won Again, and Progressives Need to Face Up to That”

    This is a historic article because it permanently sends VIRGINIA into retirement.
    Yes, VIRGINIA is that proverbial American who always needed to be addressed on important issues because she just did not get it.

    Now, we have a real person; yes Virginia must be REPLACED by “YES, KATRINA” in articles like these:

    Yes, Virginia, the Rich Continue to Get Richer: the Top 1% Got 121 …
    Yes, Virginia, the Department of Justice Really Believes It has Been …
    Yes, Virginia, Sound Regulation and Oversight Pay for Themselves …
    Yes, Virginia, Servicers Lie to Investors Too: $175 Billion in Loan …
    Yes, Virginia, The Rich Did Very Well With the Fiscal Cliff Deal …
    Yes, Virginia, the IRS Does Not Treat the Connected Like the Rest of …

  16. Trendisnotdestiny

    This a nuanced response, thank you DD. This is particularly powerful when you consider:

    1) It easier to control our own behavior (rethinking Progressive tactics)

    2) Chris Hedges’s work on how the traditional mechanisms of power have been corrupted (see the death of the liberal class)

    3) To solve problems, we must first isolate them, understand them as problematic and give them a name
    (hence, the Obama-hope branding effort for many Americans who wanted to believe the Bernaysian figment of imagination).

  17. Stroebes


    I really appreciate your writing here and the referenced articles.

    Thank you for naming names, and calling out the pretenders and the apologists.

  18. Teejay

    Yeah Katrina was duped (so was I in Nov. of 08)and the feel good progressive organizations accomplish little, but lobbing spit balls from the bleachers easy as it is doesn’t
    yield anything of real value either. As I asked once before here: How do we exert effective pressure that makes a difference, that gets results? Uncertain of the effects, I’ve emailed the White House. Here’s a portion of my last.
    Where are the #$%^ prosecutions? You are undermining democracy. Fire all the geldings at the DOJ! Democracy decimated by Corporate Capitalism. Business ownes my government! Help me get it back. Prosecute these crimes.

    Who knows its effect, but I feel better trying.

  19. jsmith

    “We talk a lot about broken models. The DC progressive model is broken.

    Just to briefly reiterate as I’m short on time:

    As it has been abundantly clear for a long time that the “progessive” movement is nothing more than well-crafted cover for the American fascist machine – cf. Al Jazeera vis a vis Qatari support for Sunni extrmemists – I still think it’s incumbent upon the well-intentioned masses to start educating themselves and adopting philosophies which have conspicuously been left out of the “progressive” discourse.

    I could go on – stop me if you’ve heard this one before, badoomtiss ;) – but it’s well past the time to bring ideas of class, struggle, worker-ownership and the reallocation of privately-controlled wealth and resources to the forefront of discourse in this country.

    This means we BEGIN the “conversation” with demands that all banks and utilities be nationalized, the health care system nationalized, etc etc instead of waiting for our “progressive” betters – and I’m looking at you union leaders – to jump in front of the parade and ameliorate the situation by turning people’s demands into “realistic” politcial scenarios.

    For example:

    Think the finance sector should be completely dismantled and all of the criminals thrown in jail?

    Why, then you’ll love our campaign for Tobin Tax.

    Isn’t it adorable?

    Instead of settling for these warmed-over charades of accountability and justice, it’s time people start organizing around principles that have at their core beliefs which are entirely antithetical to the dominant paradigm so that they aren’t as likely to be sold out and snowed by TPTB and their minions.

    How about this instead:

    We should nationalize the health care industry.

    Well, here’s Obamacare, how’s that?

    We should nationalize the health care industry AND the finance sector.

    Here’s a public option, won’t that do?

    We should nationalize the health care industry, the finance industry AND the oil industry.

    This is how you argue – from a point of strength – when you have 300 million+ people in the same situation.

    Stop settling for breadcrumbs especially the tasty “progressive” croutons.

    Note: and I didn’t mention Marx once in the entire post.


  20. sleepy

    Thanks Dave.

    Missed you much at FDL, though I didn’t think you could stay away from the blogging world too long. You have too much fire and talent.

    Great post–hardhitting and incisive. We need more like you.

  21. JGordon

    Hi Dave. How’s that Bernanke infinite money printing you were so gung-ho for been working out lately?

  22. Brooklin Bridge

    Your articles on the mortgage fiasco and financial crisis have been terrific. Perhaps you have been a little generous to Obama and company yourself at times, but regardless you have always covered these complex events with wonderful clarity and inclusiveness. Very much look forward to your posts at NC and add my own thanks to Yves and company including Lambert to the chorus as well for making it possible. I hope you get hooked on it.

    1. Brooklin Bridge

      Good catch! Here is a paragraph from that article (hope it’s ok to quote) which would be very nice to have “debugged”.

      The banks’ cash penalty [from the settlement fiasco of a year ago] funded a foreclosure prevention effort in Attorney General Martha Coakley’s office that has assisted 4,600 borrowers and stopped 427 foreclosure auctions. In addition, a November report by the national settlement monitor showed the five big banks completing 4,000 foreclosure relief cases in Massachusetts, with another 2,100 in their pipelines. The five banks have written down 2,000 homeowners’ outstanding principal balances by a total of $125 million. They’ve written off $2.5 billion in principal nationally.

      1. LucyLulu

        “They’ve written off $2.5 billion in principal nationally.”
        Yeah, second liens that they would have had to write off anyways.

        From Bank of America’s 3Q 2012 10-K:

        “As a result of the National Mortgage Settlement, in the third quarter of 2012, we incurred charge-offs of $435 million related to fully forgiven non-PCI loans in the home equity portfolio, which resulted in reductions of the same amount in nonperforming loans. Associated with the settlement, in the third quarter of 2012, we also fully forgave home equity loans in the Countrywide PCI portfolio with a carrying value before reserves of $1.6 billion and an unpaid principal balance of $1.8 billion which resulted in a decrease in the corresponding allowance for loan and lease losses.”

        Glad to have you, Dave. Pull up a chair and put up your feet for a while. We’ve got some Maker’s Mark without the extra water around here someplace (if Craazyman didn’t drink it all).

  23. Jim

    “We talk a lot about broken modeling. The DC progressive model is broken. It does nothing but facilitate the injustice already evident in this case.”

    One of my political hopes is to help to undermine the artificiality and oppressive nature of our present social order and, in this process, to come to better understand the opportunism, depoliticization and docility which this same unjust order seems to have produced in all of us.

    The growing recognition that the DC progressive model is bankrupt removes one important dimension of opportunism–that there is no alternative to our crisis but the Democratic party—from the list of phony solutions.

  24. Brian

    “I refuse to be a member of any club that would have me as a member” Julius’ words are more important today than ever. Your membership is used against you. If Katrina admits to being a board member, the club must be based upon the principles of a lack of principles.

  25. Hugh

    Much like Krugman, vanden Heuvel is an Establishment liberal and Democratic tribalist. While Establishment liberals pride themselves on their criticisms of aspects of the system, it is their defining characteristic that they never question, criticize, and challenge the system as a whole. This says little for them but is completely understandable. They are part of that system, indeed of its fashionable upper echelons. They enjoy its wealth and status, its privileges and positions. Their allegiance is to it, not to us. They square the circle of their high and honored membership in the class that is looting us with their supposed “liberal” values, by redefining the common good as what’s good for them is good for us. And of course being endlessly hypocritical.

    As from Mexico pointed out this wonderful quote from Reinhold Niebuhr long ago:

    “the intelligence of privileged groups is usually applied to the task of inventing specious proofs for the theory that universal values spring from, and that general interests are served by, the special privileges which they hold”

    So vanden Heuvel and Krugman et al will always rail against injustices in our society even as they support the class (to which they belong) which creates, inflicts, and benefits from them.

    It is important to note that this betrayal by thought and opinion leaders is by no means confined to the left. The Tea Party and the conservative pundits serve much the same function on the right. They are all part of the class war being waged against us. They are there not to focus and concentrate progressive (or conservative) forces but to distract and dissipate them by redirecting them into futile, and from the viewpoint of the system, non-threatening activities.

    How do we know this? Because we have all of us seen this play a thousand times. Thought leaders exhort us to funnel our energies into meaningless efforts destined and designed to go nowhere. The question most of us end up asking ourselves after having been through this process several times is how can someone pretend to be an opinion leader when they are so consistently behind the curve and never seem to realize that the what they are advocating doesn’t work, has never worked. This is where the debate between stupid and incompetent or intentional and criminal begins. Personally, I find most of these people to be quite intelligent. They are defending their class interests. All the rest is rationalization.

    1. Skippy

      Yes… yes… the Gawd[s Kings, Emperors and Misanthropes of all stripes – commission (pay for) – scholarly study’s on self interest… yet some don’t partake of the proffered manna… deviants to be religiously exorcised.

      Skippy… Hell one mob went at it for 600 years… ah dedication to beliefs.

    2. Doug Terpstra

      A clearly distilled definition of Fauxgressives all the way up the food chain. Worse than the acknowledged enemy, these camouflaged neolibs pose as members of the flock while they aid and abet the alpha wolf by fleecing and incapacitating his prey, the lower and middle classes.

      In the fifth year of Obama’s reign, KvH and The Nation’s “let’s really make him do it this time” argument, is just so tediously dishonest, especially when so many key economic, military, ecological, political and social metrics have deteriorated so markedly since Bush. And where the egregiously derelict DOJ and the entire executive regulatory apparatus are concerned, please, it slavishly serves a grossly immoral and violent system, as do the military and intelligence forces — all of which are under the direct, exclusive command of President Barack Hussein Obama. Katrina is, at best, willfully blind in setting up De Marco as such an obvious straw-man punching bag, especally now that housing is in full (cough!) recovery. The veal pen is such a confining trap.

      1. Nathanael

        This point — that the “work within the system” argument rings pretty hollow to practically everyone after the fifth year of Obama — is why the Duchin/MDB system for suppressing dissent (as described by ‘from Mexico’ is a long-term failure.

        I’m not sure when the tipping point will be, but the Duchin/MDB suppression system has ensured that it will be sudden, shocking, and radical — they have prevented it from being incremental.

  26. Kim Kaufman

    Thrilled to have DDay here! Great article. Yes, time to call out the folks who only want to keep the status quo — which is not working and has not for quite some time. I personally believe “the enemy” is not Fox News… but NPR (or MSNBC); not the wackadoodle Republicans… but the well meaning but spineless Progressive Caucus, etc

    1. Nathanael

      FWIW, I’m not sure the Progressive Caucus in the US House is actually in the ranks of the enemy; they may actually be good guys, rather than sellout compromisers.

      We can’t tell yet. Even when Democrats have been in charge of the House, the Progressive Caucus has been carefully kept out of power by maneuvering in the US Senate, which has basically no Progressive Caucus members (maybe 1 IIRC). This has been the case for all of my life.

      Senate Democrats, with IIRC four exceptions (the four who were actually willing to vote to get rid of the filibuster fakery) are irredemable.

  27. TimmyB

    Great Article. I do have one small quible with the following, where you wrote:

    “In fact, the model for the Bear case was written by Karla Sanchez, then a lawyer for the mortgage bond insurer Ambac, who in early 2011 went to work for Eric Schneiderman. The New York AG didn’t need a task force enacted so he could walk down the hall and ask Karla Sanchez for a copy of her lawsuit to crib from.”

    You give Schniederman too much credit. He didn’t need to hire Ms. Sanchez either. Instead, he could have got a copy of the complaint online via the Federal Court Pacer system. All you need is the willingness to pay $.06 per page for up to thirty pages, or $2.16 total. Additional pages are free.

    1. Nathanael

      Or use RECAP and pay nothing, assuming someone else has requested it through RECAP already.

      (PACER should not charge. This is another thing which needs to be changed with the revolution.)

  28. The Rage

    lol, the progressives never had a shot. When the government is run by right of center to “center-left” politicians, they are what they are.

  29. Lambert Strether

    The career “progressives”/Obama apologistes are far worse and more dangerous than the Republicans if you want any real change to the political economy as currently organized.

    * * *

    Emperor Obama keeps throwing off his clothes; and the career “progressives” keep running after him, trying to put the clothes back on him.

  30. cwaltz

    Well that vacation from blogging didn’t last dday. :) It’s great to see you writing here though. I’ve always enjoyed reading your thoughtful posts.

  31. spiny

    David, it’s great to see you back in the blogosphere!

    I have come to believe that Obama (and probably the rest of the neo-liberal wing of the Democratic party) knows a few very important things about our “D.C. Liberals”. One- that they will always put their paycheck above their professed values (and I bet a lot of their paychecks are directly related to access…) And two- the currently rabid Republican party can be used to frighten enough of them into supporting just about anything (If you think that is bad, what do you think would happen if Old Man McCain/Moneybags Mittens were president, etc…)

    Sure, selling out is as American as apple pie and triangulating between the radical right and the “center” has become the modus operandi of the Democratic party since Clinton, but still it is stunning to see how effectively the left wing has been neutralized during this presidency

  32. Jim in MN

    You could tell how far the Administration has fallen from the State of the Union address. Pretty much the whole speech could have been given by a Chinese Communist leader (or Republican). Minus the ‘voting iz gud’ parts.

    The moral code of a once great nation reduced to ‘stand with your neighbor’ (cuz no one else will)

    “We murder at will” is official policy. Corruption goes unmentioned. Markets? Private investment? Savings? Nada. Just a few more programs to train our kids for retail sales and maybe light assembly tasks.

    Really, folks. We are years past any facades of having a pro-middle class, pro-market, anti-corruption Administration. In a situation of continuous crisis, with the ‘dire circumstances’ being used to justify ever more sweeping un-Constitutional powers, there is no mention of any corruption at the core? No need to search souls, to rethink? In this moral equivalent of war? Really?

    Yes, Virginia or whatever your name is. There is no Santa Obama. And we have the lost decade well underway to prove it. Along with, thankfully, a full blown investment strike and capital hoarding movement which at least shows a strong residual desire and ability to resist in economic terms.

    After all, corruption doesn’t just deligitimize authority (for which Obama will live in everlasing shame and infamy given his background). It also ensures continuing crippling Japanification AKA zombification of our financial system, resulting in zero real returns to all major investment classes over time. Thus, the average citizen has no stake and no reason to play. $4-5/gallon gasoline just to add insult to injury.

  33. Bob Swern

    This post just made my day, week and month (at least as far as blogging’s concerned)!

    Yves and DDay in one place?! (Along with special appearances by the likes of Bill Black, Michael Hudson, Matt Stoller, et al!)

    Naked Capitalism is now, officially, my definition of blogging heaven! (Then again, compared to the hell that is known as the “progressive blogosphere,” in one fell swoop NC has merely lapped everyone else.)

    Be careful, Yves, or your servers will get stressed-out, not to mention the rest of the Democratic status quo, as well, once they learn DDay’s gonna’ be hangin’ his hat here from time to time!

    Awesomeness! And, write on!

    1. Glenn Condell

      ‘Yves and DDay in one place?! (Along with special appearances by the likes of Bill Black, Michael Hudson, Matt Stoller, et al!)’

      I just hope they never decide to hop into a small plane together…

  34. different clue

    David Dayen,

    Are you the DDay who used to guest post on Digby’s Hullabaloo years ago before it became a comment-free Veal Pen Zone?

    “Such a noble blog lies here o’er thrown”.

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