Will Future Historians Agree That 2010 Was the Death of the United States of America?

If what Neil Garfield is saying is true, then yes:

After years of negative judicial decisions about the use of a straw-man on mortgages, MERS was about to lose its existence as well as its credibility. But now all of that is set to change as Wall Street money is pouring into the coffers of those who are receptive (i.e., almost everyone in Congress). The legislation is already being drafted under the interstate commerce clause to ratify MERS and everything it did retroactively. It appears that the Obama administration is ready to pardon all the securitization deviants by signing this bill into law. This information is corroborated by several people who are in sensitive positions — persons who would be the first to know such proposals. Fortunately, there are some people in Washington who have a conscience and do not want to see this happen.

Besides the obvious seediness of this maneuver, it runs roughshod over state property laws, and the rights of investors, homeowners and borrowers. It amounts to a permanent installation of a Federal system that supersedes the county records for recording property rights. Off-record comments I’ve heard from people in power are outraged at this assault on states’ rights. But these people are not legislators, who are getting promises larger than anything in your imagination, if they will support such a bill. It might be couched as a uniform law to be adopted by the states to get around the states rights issues, but it will permanently remove some of the power over property that lies solely within the jurisdiction of the states and place it preemptively within federal jurisdiction.

All of this is scheduled to happen during the lame duck session of congress between now and the end of the this year, 2010. That means in a manner of days, some bill that may look like it has nothing to do with property, mortgages or foreclosures is going to have attached to it a provision whose effect will go even further than the notarization bill that went through Congress like S–t through a goose and almost got signed by the President. We caught that one AFTER it was passed by Congress unanimously but before Obama signed it.

It is my understanding that Garfield is something of an expert on the fraudclosure mess, as he has been fighting in the trenches against the banksters, and he has been interviewed by national television media on the topic.

I'm going to accept the premise that the lame duck Congress is going to pass a bill, most likely sponsored by an outgoing member (like Chris Dodd or even perennial "good guy" Russ Feingold), that will, as a practical matter, achieve the goals Garfield ascribes to the Obama administration.

I have a hard time accepting that the bill will look anything like the ex post facto law Garfield describes above.  Why?  Because something like that is likely to wake up a lot of economic elites (i.e., people in the top 5% of household wealth and income) to the fact that something has gone horribly wrong, and they can force real change.

For this reason, I think Garfield's sources are purposefully misleading him.  They're creating a false "anchor" from which Garfield and others will adjust incrementally around while the real action will happen elsewhere and may even seem benign.  At this point, Garfield has too much credibility, and the powers that be need him to squander a bit of it by making breathless claims that don't pan out.

So, here's my prediction on how the Washington elite are going to try to pull this off for Wall Street: 

1. There won't be one piece of legislation but two. 
2. The first piece of legislation will create federal subject matter jurisdiction over foreclosures involving mortgages that have been securitized (these are the foreclosures that are the real threat to the financial system).  This legislation will definitely be passed during the lame duck session of Congress and will most likely be offered as an amendment to either the Securities Act of 1933, the Securities Exchange Act of 1934, the Federal Trade Commission Act of 1914, or some other existing act that ostensibly passed to protect consumers. 
3. The form that the second piece of "legislation" takes depends on whether federal subject matter jurisdiction will be assigned to federal district courts or an administrative agency.  Going the administrative agency route is the most attractive to people seeking to avoid transparency and accountability, but the level of scrutiny on the fraudclosure mess and the fact that foreclosures are truly a local problem makes it far more likely that foreclosures for securitized mortgages will land in federal district courts. 
4. Regardless, the second piece will take the form of either a bill or a regulation that officially touches on "procedure."  This piece does not have to be passed during the lame duck session, and may not be.  My bet is that it will, though, and it may actually precede the first piece.
5. If federal district courts see their jurisdiction expanded, we will see a second bill, it will be to amend the Rules Enabling Act.  Under the Eerie Doctrine, federal courts dealing with state law claims must follow the "substantive" laws of the states in which they sit, but they must apply the "procedural" laws of the federal courts.  If Congress identifies something as "procedural law" for federal courts, they must accept that designation.  And what do you think Congress will identify as "procedural," if they want to sweep substantive state law claims under the rug without invoking the spectre of an ex post facto law?  Something like the sufficiency of evidence to establish the chain of title, perhaps?
6. If an adminisatrative agency has its jurisdiction expanded (or a new agency is created), we won't see much of anything.  They'll just issue a regulation at whim (which makes going the administrative route so attractive to those seeking to avoid transparency and accountability).

Anyway, I will be checking for new legislation every day to see if I find something that smells of what I describe above.

That Didn't Take Long . . .

Jane Hamsher wins the prize for the day's best title for a blogpost: "Obama Twists Own Arm, Says 'Uncle' to Extending Bush Tax Cuts."  Here's the piece in it entirety:

Political mastermind David Axelrod says the White House is ready to cave in the wake of imaginary overwhelming pressure to extend all of the Bush tax cuts, exacerbating the “deficit” problem they’ve been completely obsessed with:

President Barack Obama’s top adviser suggested to The Huffington Post late Wednesday that the administration was ready to accept an across-the-board continuation of steep Bush-era tax cuts, including those for the wealthiest taxpayers.

That appears to be the only way, said David Axelrod, that middle-class taxpayers can keep their tax cuts, given the legislative and political realities facing Obama in the aftermath of last week’s electoral defeat.

“We have to deal with the world as we find it,” Axelrod said during an unusually candid and reflective 90-minute interview in his office, steps away from the Oval Office. “The world of what it takes to get this done.”

Me or David Axelrod — one of us does not understand how congress works.

Lame duck.  Democrats still have the majority in the House. So they pass extensions for the middle class, excluding the ones for the wealthy.

All funding bills have to start in the House.  And since a rather large number of Democrats aren’t worried about reelection at the moment, there’s not much downside for them.

Then the bill goes to the Senate.  And at that point, Axelrod is worried the Republicans are going to filibuster the tax cuts?

Seriously?

I mean, THAT’S what he’s afraid of?

If Axelrod is the “political genius” guiding the Democrats these days, they should consider themselves lucky it wasn’t 100 seats.

Of course, this is what I predicted back in September:

But my answer doesn't end there: I firmly believe that Obama and the Democratic leadership are completely aligned with the Republicans in seeking an extension of all the 2001 Bush income tax cuts, including those that go to the wealthiest households.  The problem is that the Democrats cannot achieve this goal when they are in control of the presidency and both houses of Congress.  The Democratic base would not stand for it.  The good news for Obama and the Democratic leadership is that, in all likelihood, the Republicans will recapture the House this year and "force" Obama and the Democratic Senate to extend all of the Bush tax cuts.  That will be the narrative, anyway, you can count on it, if the Democrats don't hold both houses of Congress.

Political Theater Alert: The Democrats Could Have Passed Middle Class Tax Cuts Through Reconcilliation

Austan Goolsbee, a top economic advisor to the Obama Administration, claims that Congressional Republicans are "holding the middle class tax cuts hostage" (hat tip to Mark Thoma)



Goolsbee is not telling the whole truth.

First, the Democrats could have made middle class tax cuts part of the reconcilliation process used to pass healthcare reform as part of this year's concurrent resolution on the budget. It's not like the Democrats didn' see it coming.

Second, it appears that the Democrats had until today to revise the concurrent resolution on the budget to include the middle class tax cuts. At least that's my reading of 2 USC Sec. 635, which states:

At any time after the concurrent resolution on the budget for a fiscal year has been agreed to pursuant to section 632 of this title, and before the end of such fiscal year, the two Houses may adopt a concurrent resolution on the budget which revises or reaffirms the concurrent resolution on the budget for such fiscal year most recently agreed to

The current fiscal year ends today, September 30, 2010, which means the Democrats had until today to revise this year's concurrent resolution on the budget, which included health care reform.

As I read  2 USC Sec. 641, the Democrats were allowed to use the reconcilliation process of Sec. 641 to pass a revised concurrent resolution under Sec. 635. 

They didn't. 

Why not?

You can answer that question any way that makes you comfortable. 

For me, the answer begins with the obvious: the Democrats want to make middle class tax cuts a big issue for the 2010 mid-term elections.  And isn't that exactly what they're trying to do, with agents of the White House leading the way? 

But my answer doesn't end there: I firmly believe that Obama and the Democratic leadership are completely aligned with the Republicans in seeking an extension of all the 2001 Bush income tax cuts, including those that go to the wealthiest households.  The problem is that the Democrats cannot achieve this goal when they are in control of the presidency and both houses of Congress.  The Democratic base would not stand for it.  The good news for Obama and the Democratic leadership is that, in all likelihood, the Republicans will recapture the House this year and "force" Obama and the Democratic Senate to extend all of the Bush tax cuts.  That will be the narrative, anyway, you can count on it, if the Democrats don't hold both houses of Congress.

Am I accusing Obama and the Democratic leadership of engaging in a "conspiracy theory?"  Leaving aside the fact that, as a political movement, they must "conspire" to agree on common objectives and coordinate their resources to achieve those objectives, no, I am not accusing Obama and the Democratic leadership of engaging in a conspiracy theory. 

Am I accusing Obama and the Democratic leadership of being stupid?  No.

I'm accusing Obama and the Democratic leadership of being venal.  I'm accusing them of saying they want one thing while they actually want another.  I'm accusing them of lying to their base.  Big difference.

In What’s the Matter With Kansas Thomas Frank detailed how Republican get elected because of cultural wedge issues that are important to their base, yet Republicans never manage to solve those issues because they must persist in order to ensure reelection.  If you think it through, you'll recognize that Obama and the Democrats are engaged in exactly the same type of cynical politics the Republicans are accused of, but they tailor the politics to their base.  In addition to the middle tax cut issue, one need look no further than "Don't Ask Don't Tell" to see more Democratic cynicism on display: the DADT law leaves enforcement of the policy to regulations set by the executive.  Obama is the executive.  He does not even have to consult with Congressional Republicans to suspend DADT.

The bottom line is that, on both sides of the aisle, what we're witnessing is a morality play staged for our benefit, but the people putting on the play don’t really share that morality.

UPDATE:  Over at Firedoglake, a commenter argued that, if I were right about the Democrats' intentions, they would have been better served to capitulate before the mid-terms in extending all of the Bush tax cuts, and then run on being "forced" into it "class warfare" as part of the narrative for the mid-terms.  This makes no sense.   Obama wants a second term.  To get it, he needs to lose the House in the mid-terms, be "forced" into extending the Bush tax cuts in their entirety (what he really wants), and then he can use the "class warfare" meme to secure his second term.  The game is all about pitching a double truth to the masses and the elites that convinces them both to elect you.  The sad thing is that most of the masses and most of the elites don't get that.  They actually take what politicians say at face value.