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A bill was placed on the docket to change Delaware Law. It was supposed to slip through the last minute when no one was watching. That is Blevins SB 151 regarding the Treasury… Since it was a surprise, a lot of hoopla as been thrown in the fire by pundits reacting to the impact of first impressions. In their defense that was all they had to go on…
Due to time constraints this investigation will take a series of small steps, probably spread across Delaware’s official blog circuit, with help from Starkey of the News Journal…
But to back up the word coup in my title, I first want to show you how the original language was written then show you how it looked with the changes after SB 151. Of course this was stated as necessary to keep the state treasure in line, a ploy that El Som and Cassandra seem to have swallowed hook, line and sinker.
First the original bill:
For those who follow along (you all are great) here is the passage number Title 29; 2716(a)(2)
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(1) Require as a condition to any deposit of such funds in any state or national bank or savings and loan institution that such deposits be continuously and fully secured by direct general obligations of or obligations the payment of the principal and interest on which are unconditionally guaranteed by the United States of America or other suitable obligations as determined by the Board;
(2) Require that the selection of financial institutions to provide banking and investment services pursuant to this section be conducted on an open and competitive basis; and
(3) Require that temporary clearing accounts as well as major disbursement accounts be established in a bank or banks whose principal office is located within the State.
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That was the original piece of legislation. Patty’s bill seeks to amend the section 2 of that piece, the embolden area. From SB 151…
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(2) Require that the selection of financial institutions to provide banking and investment services pursuant to this section be conducted on an open and competitive basis as defined by the Board.; It shall be the responsibility of the Board to approve the selection of each of the said financial institutions by a majority vote of the members of the Board. The Board, by a majority vote of its members, shall be responsible for setting the policy as to the allocation between short and long term investments and the allocation of funds to the respective financial institutions selected through the open and competitive process; and
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Notice a “lot” of new language. In the synopsis this was sold as a clarification of the responsibilities of the board and the trimming of the responsibilities of the Treasurer. Instead, in what is now typical Markell modus of operandi, this if more of a surreptitious law-change than a clarification.
Previously the directive was this should be done in on an open and competitive basis. The previous directive specifically states this further down: 2716 (e)(1)
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The investment of money belonging to the State shall be made by the State Treasurer in accordance with policies established by the Board and subject to the terms, conditions and other matters, including the designation of permissible investments relating to the investment of the money belonging to the State,
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It is obvious to all that the existing law separates the Treasurer specifically out from all other board members when it comes to the investment of the state’s finances.
And that was really all existing code says in regards to the investment portfolio of the state’s money.
But, the new law, the one proposed by Blevins titled SB 151, makes HUGE changes. Now the board must make that decision. The board which according to Title 29; 2716(c)(4):
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The Board shall meet as often as shall be necessary to properly discharge its duties; provided, however, that the Board shall meet at least 2 times annually; and provided further, that the State Treasurer or the Chairperson of the Board shall be authorized to call special meetings of the Board.
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and 2716 (c)(2)
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a quorum of 5 members shall be necessary to hold a meeting of the Board.
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and 2716 (d)(5)
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The use of teleconferencing or videoconferencing is authorized for use in conducting meetings of the Cash Management Policy Board.
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Even now under existing policy only 3 people out of nine, if they time their conference-call correctly, can decide the future investment strategy of this state. Patty Blevin’s law would now give those three people (whomever they might be) unprecedented power and remove the current oversight of the only elected official responsible to the public.
“Coup” is the proper term for it.
Italy paid back $3.4 Billion to Morgan Stanley it was announced today. That is one half the new tax increase being levied on every Italian as part of the debt solving issue.
Why?
Morgan Stanley is just a company. A piece of paper.
Why should every Italian man, woman, and child, pay out of pocket for a Morgan Stanley bet that went wrong?
When put that way, it is obvious.
They shouldn’t. No one should.
It’s funny what you get from the little bylines down at the end of a news story. Putting them together creates a truer picture than the one allowed past the paper’s corporate sensors. lol.
I was over at Nancy’s and came across this article which had this article linked to by the words Federal Deposit Insurance Commission.
You may have seen the headline without seeing the number behind it. This headline has the number.
FDIC To Cover Losses On $75 Trillion Bank of America Derivative Bets
Within that story is a link to Bloomberg which states:
Bank of America’s holding company — the parent of both the retail bank and the Merrill Lynch securities unit — held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades.
That compares with JPMorgan’s deposit-taking entity, JPMorgan Chase Bank NA, which contained 99 percent of the New York-based firm’s $79 trillion of notional derivatives, the OCC data show.
So unless you were putting numbers together, you are probably not aware that our two major banks, are $154 Trillion in the hole…
How much is that? A lot. THE ENTIRE GDP OF THE UNITED STATES IS $14.5 TRILLION DOLLARS. THAT MEANS IF EVERY DOLLAR AND CENT OF THE UNITED STATES ECONOMY WERE SPENT TO PAY OFF JUST THE DERIVITIVES THAT PHIL GRAMM DEREGULATED SINCE 2000, IT WOULD TAKE MORE THAN TEN YEARS.
Before you panic, consider this. These totals are stretched over time. That is the same ratio as someone making $50,000 who bought a new house whose total cost was $533,000…
Ok, NOW PANIC!!!!!
The story goes that Warren Buffet, rather worried about his investments early 2008, wanted to talk to God… God told him to use his phone and he’d send him the bill… He got and paid the $333 million dollar charge. His investments flourished, too… That would be the end of the story, except he was down in Sussex County recently, following up first hand on a corporate case being processed out of Georgetown… once again, he asked God for the right to call, and agreed to accept the charges… When he got his bill, he was fuming… He was only charged 25 cents… “God”, he said, “you ripped me off on that first call, big time!”… God said, “Warren, don’t you get it? In Sussex County, that’s a local call…”
Local call or not, Sussex County is weighing in on whether to say a prayer before County meetings or to not… Here are a few takes on that policy: one, two, three, four……
As someone who grew up where prayers were always said before football games and county meetings, it isn’t a big deal…… That is, as long as everyone agrees it isn’t a big deal. You don’t see prayers before meetings conducted in New York.
Not because New Yorkers are heathens, but because in New York, you have a multiplicity of religions, so praying a prayer from one of them, is a slap in the face for all others…
Why it’s even an issue in Sussex County is because the Positive Growth Alliance, has been building condo’s like ants, and lots of people who did not grow up in Sussex County, now live there. Many have different ideas of religion than those who’ve always been there all their lives…
If everyone believe in the same version of God as does David Anderson, then of course, duh, why are we even arguing about it… Of course we’re going to pray to God to guide us through this meeting.. That’s what He’s for!
Suddenly, thanks to Rich Collins and the Positive Growth Alliance, we have tons of people who do object to having David Anderson’s version of God, one who dislikes Homosexuals, and one who casts pox on Democrats, one who believes married people should have sex only when they have children, one who believes sex between animals is immoral, one who believes taxes are caused by the devil, one who believes that nature was made to bulldoze and pave with a combination of petroleum and gravel. … one who believes that oil companies have the divine right to pollute oceans, one who believes that animals were made for us to kill. … one who believes a national religious holiday should fall on the first day of deer season.. one who believes pick up trucks and baseball caps are proof that homosexuality is a sin,… on who believes killing someone with a gun is not a sin, but taking that gun away for the safety of others is…
(yes, I’m having fun and talking tongue in cheek)…
The point I’m making is that Sussex County is changing; and it is changing mostly thanks to Rich Collins and the Positive Growth Alliance.
Can you make new citizens join the current religion? If so, then by all means, just like the days of old, they will see no qualms in having a tiny prayer before the meeting.
But if they don’t want to join that religion, then, to force one group of religious people to impose their prayers on others, is not American…In fact, it’s kinda creepy…
If in an effort to show fairness, the Sussex County decided they would do prayers from all religions in alphabetical order, when they came to “B” and hit Buddahism, giving an Buddahist prayer before the session, most of those in the audience would be saying WTF! This is our nation, why do we have to listen to such crap…
Which is… exactly what those Buddahists think, who have opened a business in Millsboro, and have come before the county to ask for a variance on something or other that is in their antiqued code….
So… If it is unnatural for a Baptist to suffer a Buddahist prayer, it is equally unnatural for a Buddahist to sit through a Baptist prayer…
It’s not about one religion being right and the other wrong. It’s about who the citizens are that make up Sussex County. If you want to blame anyone over this controversy, the blame solely lies with those who built up Sussex County and brought in all these new people to begin with… Now that they are here, we have to make Sussex County as fair to them as New York, is fair to us, when we take our business up there……
Positive Growth, huh? Depends on your version of positive I guess………….
Today the White House issued this Executive Order.
“Should the debt ceiling not be lifted in time by May 16, in order to prevent the Treasury from running out of funds, I am hereby using the emergency powers given to the Chief Executive by the Constitution, to temporarily suspend the Bush Tax Cuts until: 1) either we can legally borrow the funds to continue paying on our commitments, or 2) we bring our debt down to the 2008 level by having much more tax revenue pour in.
This is in effect, immediately, and I have instructed the IRS to recalculate all 2010 tax forms over the level of $2 million dollars, and asses those individuals and companies, for the differences.
We must take this action because Republicans want to pay politics with your lives. As Chief Executive, I am responsible to you, not them. I won’t let that happen.
With these tax cuts out of the way, and with our austerity programs already in effect, that windfall of profit the Treasury will receive, will be entirely funneled towards the paying off our debt.
This policy will continue until Republicans can act reasonably and in a productive fashion.
Barack Obama.
Duffy is God’s answer to a prayer.. I miss the old days of blogging when we were debating principals instead of people… Duffy has stuck to the old line of debating principals with facts, and that is what makes him special in the eyes of bloggers everywhere…
Since the passing of Steve Newton, he has been the only one to challenge me in any argument, and usually some pretty good stuff comes out of both sides during the exchange… I have respected that.. Cause once again, opinions mean dick. Facts are what we steer by.. It is my hope that in responding to his challenge that an answer may make itself apparent.. Who knows? It may not come from me… But if I’m the catalyst for bringing it out in the open, then… none of this was in vain..
Why I like to debate Duffy is simple.. Neither side, he or I, is concretely set in their opinions… We accept it when the other side makes sense… I usually go into such debates having no idea where they’ll end up… I hope the rest of you enjoy the ride as welI….
That said..
kavips rebutt’s:Uh… Mr. President. That’s not entirely accurate.
First off, the Community Reinvestment Act of 1977 was developed for, and locked in on, urban developmental areas and had no part of the subprime boom, which primarily occurred out in western desert regions where owning 4 to 5 investment homes was normal… Those homes were overwhelmingly funded by loan originators NOT SUBJECT to the act… We all know the crises was not because people couldn’t afford a payment on their house. It came about, because with no occupants, people could not afford the payments of 4 to 5 houses….. Instead of one loan per borrower turning up in default; four to five were.
Second off, The housing bubble reached its point of maximum inflation in 2005.
Courtesy of NYT
Third off, During those exact same years, Fannie and Freddie were sidelined by Congressional pressure, and saw a sharp drop in their share of loans secured by the Feds… Follow the dotted line on the very bottom of the graph…
Courtesy of NYT
Fourth off; During those exact same years, private secures, like Delaware’s own AIG, grabbed the lions share of the market.
Courtesy of NYT
Remember these graphs for later on when I discuss the results of deregulation, versus regulation… But like it or not, these graphs conclusively show that private insurers, who thanks to Marie Evans, we now know were deregulated by Phil Gramm in the 2000 Omnibus Bill, were the primary cause of the worlds financial collapse.. Probably put best by these words of AIG’s spokesperson, who when asked why they didn’t have sufficient funds to cover losses, said point blank, “We were deregulated. We were no laws requiring us to keep any funds, ..so we spent it…”
kavips rebutt’s:Uh… Mr. President. That’s not entirely accurate. I agree that the hedge funds did survive better than the banks. Not because of bailouts, but because they sold short during the crises and made billions while firms closed and people got thrown out of work. There is nothing wrong with that; I did the same. In fact close readers may remember my warnings that the crises was impending almost a year earlier. Very close readers may remember my telling them exactly when to sell, and at what point the stock market would rebound… I must say: I called it rather well. 🙂
De regulated hedge funds are not the issue… De-regulated, excessively leveraged, mortgage securities, are a different story however… They, not the banks that held them, are the cause of the crises…Years from now, when academics search for causes of the stock market crash of 2008, they will focus on the pivotal role of mortgage-backed securities. These exotic financial instruments allowed a downturn in U.S. home prices to morph into a contagion that brought down Bear Stearns a year ago this month – and more recently have brought the global banking system to its knees.
Where you err is when you state that banks too big to fail, assumed they would be bailed out… By implication, you say imply they failed from squandering money, and wanted the bailouts.. But your tax dollars didn’t flow directly to the bottom line.
So in that sense, the bailout money represents an expense for banks. That’s one reason a number of banks have said they want to give the money back as soon as possible.
You say big banks were counting on a bailout, and they got them? That didn’t happen to these banks. New Mexico, Georgia, and Florida each lost a bank just last Friday. That brings to 8, the number of banks failed in June. Unfortunately if a bank is failing, it can’t bet on itself to fail, as can a hedge fund.
kavips rebutt’s:Uh… Mr. President. That’s not entirely accurate. The idea is that the banks made bad decisions knowing taxpayers would bail them out is the issue that is inaccurate. For the record, I have no qualms that it was the Clinton legacy who tore down the wall between banks and investment banking. Like you, I feel it was a good idea to do so… Again the problem was not primarily with banks making loans to people who could not pay.. Although, it was as late as October 2009, when I was made aware of one private Bank in Denver still exaggerating income to make loans look good enough on paper to get approval of securitization. What caused the collapse was the leveraging of those loans as securities, so that as the housing market became overextended, and the ARM jumped past the low cost opening years, the damage was 100 times worse because of leveraging. What made the collapse criminal, was that the insurance most financial institutions had bought from AIG, to cover such an improbable event, had already spent by that companies executives, out on bonuses to themselves. What made it doubly criminal, was that when they received government dollars through a taxpayer bailout, those same executives assumed it was to first go towards paying their bonuses again. However, very recent events may give some cover to the argument that some collusion was implicit in the bailing out of Goldman Sacs and AIG… Basically, once bailed out, AIG paid Goldman Sacs for shares twice as much as they were worth. The documents also indicate that regulators ignored recommendations from their own advisers to force the banks to accept losses on their A.I.G. deals and instead paid the banks in full for the contracts.
Reading a recent old copy of the News Journal, I saw an article where some Republican buffoon, said something like: “yeah, we’re gonna stick it to Chris Coons that he’s a tax and spend Democrat.”
I laughed out loud…
Go ahead … Make us draw attention to you..
kavips 