About Those Banks…

News of the recent failure of two significant banks was enough to send chills down the spines of lots of Americans–especially those of us who are retired and dependent upon funds invested in the market. No matter how conservative our investment choices may have been, it’s like being on an ocean liner: if the entire vessel sinks, we’ll all go down, prudent stateroom choices or not.

As usual, Heather Cox Richardson could be counted on to produce the clearest explanation of the situation–not just the event itself, but the government’s (thankfully competent) response.

At 6:15 this evening, Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, and Federal Deposit Insurance Corporation (FDIC) Chairman Martin J. Gruenberg announced that Secretary Yellen has signed off on measures to enable the FDIC to fully protect everyone who had money in Silicon Valley Bank, Santa Clara, California, and Signature Bank, New York. They will have access to all of their money starting Monday, March 13. None of the losses associated with this resolution, the statement said, “will be borne by the taxpayer.”

But, it continued, “Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.”

The statement ended by assuring Americans that “the U.S. banking system remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry. Those reforms combined with today’s actions demonstrate our commitment to take the necessary steps to ensure that depositors’ savings remain safe.”

My immediate reaction was to give thanks that the challenge posed by these bank failures was being handled by the knowledgable and competent people in the Biden Administration, rather than by the Keystone Kops assembled by Trump.

Of course, the obvious next question was: how did this happen?

Most of us think of bank failures as harbingers of Depression, so I was surprised to read that a few banks fail every year, although Richardson reports that these are the first two  during  Biden’s presidency. (There were sixteen during Trump’s four years in office, eight of which preceded the pandemic).

Silicon Valley was the go-to bank for tech start-ups, which typically begin with a lot of cash from investors and IPO’s, and don’t need much in the way of loans.

So, rather than balancing deposits with loans that fluctuate with interest rates and thus keep a bank on an even keel, SVB’s directors took a gamble that the Federal Reserve would not raise interest rates. They invested in long-term Treasury bonds that paid better interest rates than short-term securities. But when, in fact, interest rates went up, the value of those long-term bonds sank.

Then, because SVB concentrated on start-ups, they had another problem. As interest rates go up, investors want faster returns than most start-ups can deliver. That meant that SVB’s depositors began to withdraw their money.

So SVB sold securities at a loss to cover those deposits. Other investors panicked as they saw SVB selling at a loss and losing deposits, and they, too, started yanking their money out of the bank, collapsing it. Banks that have a more diverse client base are less likely to lose everyone all at once.

There is–as you have probably guessed–a larger lesson here. The “libertarians” (I’m looking at you, Peter Thiel!) who have been vocal opponents of government regulation of the banking industry and  government relief for student loans–or really, pretty much anything government does that doesn’t benefit them personally– immediately insisted that in this case, the banks should be bailed out.

Richardson points out that in 2018, under Trump, Congress “weakened government regulations for banks like SVB and that SVB’s president had been a leading advocate for weakening those regulations.” Had those regulations been in place,  SVB would probably have remained solvent.

The Biden administration had been considering tightening the banking regulations that were loosened under Trump, and it seems likely that the need for the federal government to step in to protect the depositors at SVB and Signature Bank will make it much harder for those opposed to regulation to keep that from happening.

Was this a “bail out”? There’s an argument that making depositors whole while letting the shareholders eat their losses isn’t a bailout. The intervention was clearly needed to contain the potential for an economic collapse that would hurt everyone. Whether this is considered a bailout or not, at least the banks, and not the  taxpayers, are on the hook.

Getting rid of the hypocrisy is probably an unattainable goal….

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The ReThink Project

I used to defend Indiana’s slow progress by pointing out that allowing other states to innovate and then seeing what worked and what didn’t was prudent. What happened in State X after it did thus-and-so, and what can we learn about the best way to handle thus-and-so?

Unfortunately, that justification too often mistakes stubborn resistance to change for prudence.

That bureaucratic refusal to consider past error was especially annoying in the initial effort to get the Indiana Department of Transportation (INDOT) to rethink its automatic approach to repairing the Interstate highways that divide the city’s downtown.

As I have previously written, it was inarguable that at the 50-year mark (which we hit a few years back),those interstates required  extensive repairs. A group of downtown residents, businesses, architects and landscape architects formed a group they called “ReThink I69/70” and urged INDOT to “rethink” the design of those highways and to mitigate, where possible, the problems they’d created when they were first rammed through the city’s Black and historic neighborhoods.

The racism reflected in the siting of the nation’s Interstate system has been widely documented, and the Biden Administration is confronting the damage.

The interstate system — largely built between the 1950s and 1970s — helped move Americans in large numbers and at high speeds, but its creation required a lot of destruction. History.com reports that “more than 475,000 households and more than a million people were displaced nationwide” due to federal highway construction. “Hulking highways cut through neighborhoods, darkened and disrupted the pedestrian landscape, worsened air quality, and torpedoed property values.”

That damage was largely inflicted in Black and Latino neighborhoods. That wasn’t an accident. At Yale Law Journal, Sarah Schindler writes that the “placement of highways so as to intentionally displace poor black neighborhoods” was commonplace in places like New York, Miami, Omaha, Oakland, and many other American cities. “Although this work was undertaken in order to make places more accessible to cars,” she adds, “it was also done with an eye towards eliminating alleged slums and blight in city centers.”

Knocking down poor neighborhoods to make room for commuter highways was inherently racist, the Los Angeles Times adds: “Highway builders often defended taking property in Black neighborhoods by arguing the land was cheapest there — a fact that relied on government-backed mortgage redlining policies that discouraged investment in Black areas.” Sometimes the harmful intent was more overt, Reuters reports. In Montgomery, Alabama, the state routed Interstate 85 “through a neighborhood where many Black civil rights leaders lived, rather than choosing an alternate route on vacant land.”

The need to address structural problems in our aging roadways gave Indianapolis a rare opportunity to address the problems created by those initial decisions. The ReThink group argued that  thoughtful revamping could improve traffic flow and restore community connectivity and walkability. It could also spur economic development that would significantly add to the city’s tax base–nothing to sneeze at, given our fiscal constraints. It is rare that a city gets such an opportunity.

The initial response of INDOT was to ignore and dismiss the alternatives promoted by the ReThink coalition. It took considerable time and effort to get the agency just to back off its initial plans to add lanes to the current configurations,  consuming more real estate and increasing the divisions between neighborhoods. By the time the coalition had generated enough attention and support for redesign, the northeast section of Indiana’s Inner Loop was already being reconstructed–in place, but thankfully, without the additional lanes and concrete walls.

The remaining work, however, may benefit from the persistence of the ReThink coalition and  the Biden Administration’s emphasis on the need to address the mistakes (and animus) of the past

Today Mayor Joe Hogsett, Congressman André Carson, Rethink Coalition, and the Indy Chamber announced a $2 million grant from the U.S. Department of Transportation (USDOT). The award will fund a planning study around the southeast leg of the I-65/I-70 Downtown Inner Loop near the Fletcher Place and Fountain Square neighborhoods, examining how to create more livable, reconnected communities around the interstate while maintaining interstate commerce and regional travel.

“This federally funded study will help guide our community as it looks at ways we can reunite neighborhoods divided by the original interstate program,” said Mayor Joe Hogsett. “Thanks to USDOT, INDOT, and our community partners, this announcement begins a process that could have lasting benefit for generations of Indianapolis residents.”

There’s a broader lesson here. Citizens who are sufficiently aroused can move lawmakers and bureaucrats.

Chinese citizens forced changes to their government’s  COVID rules. Iranians are protesting their government’s “morality police.” Israeli citizens are opposing Netanyahu.

Margaret Mead said it best : Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.
 

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Who Votes For These Clowns?

At the recent CPAC meeting, Donald Trump gave a rambling, largely incoherent speech during which he promised attendees that–if re-elected–he would be their “retribution.”

Maybe that’s the clue. Maybe the voters who cast their ballots for obviously mentally-ill candidates are seeking retribution– using those ballots as weapons, as signals of hostility to a society that they believe has failed to properly appreciate them.

Or perhaps they are as nutty as the Congresscritters Dana Milbank recently profiled., Maybe they suffer from what he labeled “long covidiocy.”

The pandemic has faded, but one of the least understood effects of the virus still eludes treatment: There is no known cure for long covidiocy.

House Republicans presented with a textbook case of the ailment this week. The newly formed select subcommittee on the coronavirus pandemic met for the first time for what its chairman, Rep. Brad Wenstrup (R-Ohio), said would be some “Monday-morning quarterbacking.” It instead became a Tuesday afternoon of false starts and illegal blocks.

Republicans on the panel, some of them medical doctors and others just playing one on TV, offered their predictable assessments. Rep. Debbie Lesko (R-Ariz.) kicked off with the unsupported allegation that “covid was intentionally released” from a Chinese lab because “it would be impossible for the virus to be accidentally leaked.”

Rep. Richard McCormick (R-Ga.) advanced the ball by informing the panel that coronavirus booster shots “do more harm than good.”

And then, of course, Marjorie Taylor Greene secured her position as the poster child for lunacy, testifying about a stunning (albeit wholly imaginary) medical discovery: “Researchers found that the vaccinated are at least twice as likely to be infected with covid as the unvaccinated and those with natural immunity.”

As Milbank responded, “Thank you, Dr. Jewish Space Lasers.”

The panel heard from three scientists who had championed a herd-immunity approach to covid. Two of them had co-authored a 2020 publication in which they argued for just letting COVID run wild through the general population.

Marty Makary, a Johns Hopkins surgeon and Fox News regular, suggested (among other things) that Dr. Fauci had bribed people in the medical community to dissemble about the virus.

Makary is the guy who predicted in late February 2021 that “covid will be mostly gone by April.” He was also the source of Florida Gov. Ron DeSantis’s dubious claim that face masks cause unhealthy levels of carbon dioxide in children’s blood.

Another witness, Jay Bhattacharya of Stanford University (also a Fox News regular, on matters medical and nonmedical), had called coronavirus testing “actively harmful” and warned about “great harm” and “danger” from vaccination. He worked on a study that claimed the covid death rate was similar to the flu’s, and he argued in March 2020 that “there’s little evidence” that “the novel coronavirus would kill millions” if left unchecked….

Milbank noted that the Trump Administration embraced these scientific outliers; they became right-wing celebrities, and their fantasies promoted resistance to masks and vaccines. The results of that resistance are now being tabulated;  actual research confirms that  covid deaths in counties that voted for Trump vastly exceeded the death toll in counties that went for Biden.

The hearing that was the subject of Milbank’s column raised a number of questions, the most obvious of which is why on earth presumably serious public officials would provide a platform to people promoting “facts” and conspiracies that medical science has conclusively disproven.

That question, of course, leads us back to the central conundrum of our times: the voters who support these deranged people. Who looks at a Marjorie Taylor Greene or a Paul Gosar (whose siblings took out a TV ad warning voters that he was nuts) or the multiple others who are at best an embarrassment and at worst a threat to America’s civic fabric, and thinks “Yes, I want that jerk to represent me”?

What sort of seething vitriol impels an American voter to cast a ballot for a candidate who doesn’t even try to present a rational facade? Who chooses the candidate who proudly parades bigotry while exhibiting an utter lack of  temperament and gravitas?

The answer, evidently, is “the GOP base”–voters looking for White Christian retribution.

Those voters are in the minority, so in order to win elections, Republicans need to depress overall turnout.  Like Republicans elsewhere, Indiana’s GOP is working on that.

 Governing recently reported

The Indiana Senate Committee on Elections heard testimony Monday concerning an absentee voting measure that would change who may deliver absentee ballot applications to voters and what proof of identification is required from voters to be able to obtain a ballot…

Voters’ and civil rights’ organizations say the measure duplicates existing processes and laws and will disenfranchise the most vulnerable of voters: the elderly, disabled and members of the military.

 Extreme gerrymandering evidently wasn’t anti-democratic enough…

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“Privatizing” Our Schools

I devoted a fair amount of my academic research to the issue of privatization, and I largely agree with the periodic analyses on the “In the Public Interest” website.

Confounding the issue is the fact that what Americans call “privatizing,” is really something quite different: contracting out.

Margaret Thatcher privatized many of her country’s industries–she sold them off to private-sector operators, who then owned them and paid taxes (and in some cases went bankrupt and out of business). In the U.S., by contrast, we “privatize” by encouraging government agencies to contract with for-profit and non-profit organizations to manage government programs. 

In other words, a program that government is obligated to provide continues to be paid for with tax dollars, and government remains responsible for ensuring that it is operated in a manner that’s consistent with the Constitution, the terms of the contract, and (ideally, at least) the public interest.

My research convinced me of three things: 1) while contracting may be appropriate under some circumstances, it is not the panacea that so many politicians seem to think. Sometimes it makes sense, often it doesn’t.  2) the cost savings that are touted by privatization advocates are largely mythical, the result of omitting what it costs government to manage these contracts–or the even greater costs of failing to manage them. And 3) far from shrinking the size of government, as proponents seem to believe, contracting actually expands both the size and scope of government, while at the same time making that expansion less visible and government less accountable.

Bottom line: contracting out doesn’t usually save money, and the ability of government to monitor those with whom it contracts has proved to be less than ideal, to put it mildly.

Also, in far too many situations, contracting has become the new patronage.

I have written pretty extensively about the issues involved, including Indianapolis’ unfortunate flirtation with “privatizing” under former Mayor Stephen Goldsmith. 

Years of research have taken much of the bloom off the privatization rose, but of course, as readers of this blog are well aware, there is one area in which proponents stubbornly continue to insist upon benefits that have proved imaginary, while studiously ignoring numerous and troubling negative consequences. 

That area is public education.

“Florida Man” DeSantis isn’t the only ideologue  pushing a voucher program, but an article in the linked website  revolved around a set of concerns explored by a Florida  newspaper :

With Tallahassee “poised to bleed billions from public classrooms through a sweeping expansion of private school vouchers,” The Sun Sentinel lays out some of the problems this will bring:

If a private school wants to teach children that Jesus rode dinosaurs and call it geography, the state has no say.

If a private school wants to expel an honor-roll child for being gay, that child is out of luck.

If a private school wants to teach students in a building rife with code violations, students will just need to bring buckets on rainy days. Or fire extinguishers.

If a private school wants to hire teachers with a criminal background, or teachers repeatedly fired from previous jobs, or teachers who have no training in teaching, who in the state has the authority to stop them?

If a private school abruptly closes mid-year, who takes care of the students?
The answer? No one.

These are not scenarios limited to Florida. You can find troubling examples of each of them in existing voucher programs in Indiana and elsewhere. 

Most of us understand–and budget numbers confirm– that voucher programs bleed dollars from public schools that need those resources.

I don’t know about Jesus riding a dinosaur, but multiple investigations of private religious schools accepting vouchers have found creationism  substituted for science instruction. Many of those same schools proudly and publicly decline to accept gay students, or even non-gay students who have two mommies or two daddies.

In Ohio a few years ago, David Brennan, a politically well-connected businessman, opened a chain of schools in order to profit from that state’s then-new voucher program; students didn’t learn much, and several of the schools were found to have multiple, dangerous code violations.

In Indiana, we’ve had voucher schools that suddenly closed, leaving parents and students high and dry.

Forgive me for sounding like a broken record, but there was a reason Americans  established public schools. Public schools are intended to teach more than “reading, writing and arithmetic.” They are intended to create informed and engaged citizens–to advance e pluribus unum by pursuing what is termed the civic mission of the schools.

Heedless of the educational failures and lack of accountability, the World’s Worst Legislature is planning to expand Indiana’s already out-of-control school privatization. No wonder Indiana ranks 43d in the percentage of citizens with  bachelor’s degrees–and  worse, lacks legislators having common sense.

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Telling The Truth About The War On Trans Children

Indiana isn’t the only state waging war on trans children, their parents and the medical providers trying to help them. At a time America (and the whole world, for that matter) is facing innumerable challenges–climate change, Putin’s war in Ukraine, a re-ordering of world power generally, etc.–today’s GOP has fixated on the “threat” posed by defenseless children.

About those claims that Republicans are defending “parental rights”– it seems the GOP only defends parents who share their constipated views of the world.

Want to ban some books? Make life difficult for LGBTQ children? The GOP will empower you! Want to allow educators and librarians to share books that other parents consider appropriate? Want to be supportive of your child struggling with gender dysphoria? Not so fast!

In Red Texas, being supportive of your child’s transition has actually been defined as child abuse.

Kentucky recently passed a bill not unlike a handful of hateful measures on their way to passing in Indiana. The bill limits medical care related to gender transition services for minors and punishes providers who assist their minor patients. It also prohibits “a public school counselor, school-based mental health services provider, or another public employee from aiding or assisting in the provision of gender transition services for a person under the age of 18 years.”

During the debate preceding Kentucky legislators’ lopsided vote to make life more difficult for trans children, a state representative named Pamela Stevenson gave an impassioned speech in which she told the ugly–but undeniable– truth.

 “I’m not even sure how we got here, but as a 27-year military veteran, I fought so that all people could have freedoms, not just the ones I liked,” said Stevenson, a retired U.S. Air Force colonel.

When a co-sponsor of the bill said she’d written it to “protect children from irreparable damage,” Stevenson had a withering response.

“Don’t tell me it’s about irreparable harm because you’re not doing anything for the children that are hungry,” Stevenson said.

“You’re not doing anything for the children that are in foster care being abused. You’re not doing what needs to be done for the little black kids who are experiencing racism every day. It is not for irreparable harm. It’s because they are not like you. And as a mother, how dare you interfere with one of the most intimate relationships.”…

If you were really, really concerned about children, I could give you 100 other things you could do to make sure that every kid in Kentucky thrives. Let’s try giving them water out in the rural areas, potable water. Let’s try Medicare and Medicaid, so they can go to the doctor. Let’s try getting the kids off the street that are homeless and sleeping with snow as a blanket. I was born at night, but not last night. This is not about what you say it is.”

What I find so depressing about these attacks on vulnerable children is the likely reason for this particular culture-war focus: America’s current acceptance of LGBTQ+ citizens and same-sex marriage. Polling regularly confirms that acceptance; Gallup fielded a 2022 poll that showed 71% of Americans agreeing that same-sex marriages should enjoy the same rights as opposite-sex ones.(That’s a staggering figure: These days, seventy-one percent of Americans probably don’t agree that the Earth is round.)

Since gay folks came out of the closet, most Americans have discovered that they know gay people and that they aren’t any different from the rest of us. Trans people, however, are rarer and still considered “exotic”–or in Republican-speak, fair game.

We no longer live in the “good old days” when Republicans could generate turnout with hysterical warnings about same-sex marriage or other attacks on LGBTQ folks generally–these days, such broad-based attacks are too likely to create backlash. But the GOP isn’t going to abandon its most effective strategy–generating fear and hatred of the “other”–so the party has narrowed its focus to Drag Queens and trans Americans.

Human Rights Watch  is just one of the organizations that has documented the extent of discrimination and violence experienced by the trans community. Those reports are depressing and sobering, but the viciousness of the attacks on children is particularly disgusting.

As Axios has explained, these bills are part of a larger, “carefully coordinated campaign by the far right and religious conservatives to attack trans people in the wake of their failures to stop marriage equality and pass anti-trans bathroom bills over the past decade.”

After all, if a few kids kill themselves as a result–tough. All’s fair in politics and culture war.

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