How to Take Congress Back from the Banks

Bankruptcy "cramdown" reform was defeated in the Senate today, which caused Sen. Dick Durbin to accurately declare, "banks own the place." Glenn Greenwald, Jane Hamsher and Howie Klein explain how. So what do we do about it?

Chris Bowers thinks we must retreat until broader cultural change occurs:

If you want broad progressive change in America, it is essential to look beyond the electoral and legislative realm. Surely we must maintain our efforts on the political front, but the leading edge of progressive change is coming in other areas. Things like the network neutral Internet, increasing immigration, increasing acceptance of the LGBT community, and shifting religious identification are making the country more progressive than any single or combination of political campaigns over the past two decades.

But Scarecrow wants to fight and reminds us we already own the banks:

Are we really that helpless against an industry that has tanked the US economy and whose largest members are de facto wards of the state?

Excuse me, but if the amount of bailout funds, for which we received preferred shares, already provided the largest banks were converted to the equivalent amount of voting stock, the US would virtually own the major banks. Moreover, if the US government reversed or reduced its policy of guaranteeing bank loans, or stopped bailing them out through pass-throughs from AIG, the major banks would face serious problems instead of crowing about how they don't need federal bailouts.

Scarecrow blames President Obama for not exercising the government's ownership rights:

For some unexplained reason, Obama feels he must assure the Wall Street Journal that he doesn't want to intervene in the banking industry, even though the industry has put millions of people out of work, destroyed their economic security and is now crippling efforts to reform them. But grownup Americans get it even if the Republican crazies can't or won't, so just stop apologizing and get on with what needs to be done.

We need a champion, Mr. President. You have leverage and you have a bully pulpit, and the public is rightfully furious at the banks. These are weapons. Use them.

We should definitely push President Obama to use our ownership stake in the banks to pressure them to stop blocking the changes we need to make.

But we should also take aim at the specific way the banks (and every other industry) "own the Senate," as Durbin said.

First, we must prohibit lobbying by any corporation that gets Federal money, whether contracts or TARP. As Jane Hamsher writes,

Let's just be clear on this: money that went to banks through TARP was used to lobby these Senators. TARP recipients simply hid behind lobbying organizations like the MBA and the ABA who did the dirty work of screwing mortgage holders out of badly needed relief to the benefit of the banks, once again.

Second, we need to pass clean elections (public funding) of Congressional races.

Third, we need to restore the Founding Fathers' definition of bribery. As Atrios writes,

the system of legalized bribery we have in this country is so part of how our government runs that unless someone is literally funneling cash into their bank accounts (and sometimes not even then) it's just seen as business as usual.

I would expand the definition bribery so it meaningfully includes any money given to a campaign for legislation.

What America needs more than anything else is a legal definition of "bribery" that reflects the "original intent" of the Founders - paying money to an elected or appointed official to get a special benefit, regardless of whether it goes into his pocket or his campaign. It should not require a freezer full of cash (like William Jefferson) or a fee-for-service list (like Duke Cunningham) to trigger a bribery investigation.

Update 1: David Sirota notes,

Bankruptcy judges currently have this "cramdown" power to renegotiate mortgage terms on vacation homes and investment properties. Vacation homes and investment properties are disproportionately owned by very rich people.

and rightly asks

can someone please ask Democratic proponents of cramdown (who I do genuinely applaud for their courage) why they didn't just make this point over and over again? The bought off whores who voted against this bill were allowed to make this debate into one about whether it is "fair" to let people renegotiate loans they agreed to. That's a shame, because the real question is whether it is "fair" to let judges help rich people keep their vacation homes but not let those same judges help regular people keep their primary residences.

The answer, of course, is "framing." Republicans wage every battle by first identifying a winning frame, then repeating it ad nauseum. Democratic leaders - especially progressives - still haven't learned this essential strategy. Maybe netroots hero Darcy Burner can use her new position at the American Progressive Caucus Policy Foundation to change this?

Update 2: Adam Green highlights the absense of any progressive mobilization for cramdown, and contrasts this with the successful mass mobilization for Net Neutrality.

In rebuttal, Bowers reiterated the need for broad cultural change before political change is possible. But how would cultural change ever result in a successful Senate vote for cramdown? It would have to produce 80 progressive Senators to overcome the unavoidable 20-odd Democratic Corporatists, which is pretty much impossible given the culture of all the Red States. The only way to win these battles is to ban lobbying by contractors, separate Corporatists from their Corporate donors through "clean elections" and redefine bribery as the Founding Fathers intended.

Update 3: Bob Borosage says we need a real grassroots movement to push Obama to the left:

what Obama has been missing has been an independent, obstreporous citizens' movement demanding fundamental reform. Roosevelt had the labor movement, the Townsend Clubs, Huey Long, socialists and communists challenging him from the left. Johnson had the civil rights movement forcing his hand...

The New Deal we remember - Social Security, the Wagner Act, Fair Labor Standards, the SEC and Glass Stegall, progressive taxation - came not in the first 100 days, but as Roosevelt, under pressure from his left, geared up for re-election. The Voting Rights Act surely would not have been passed with Selma, and many other sacrifices transforming public opinion to enable Johnson to act...

The country would be far better served with an angry populist movement that indicts Wall Street but demands greater support for working families and Main Street. But anyone building that movement will have to understand that they might earn respect, but they won't be loved in the White House.