According to The Wall Street Journal, "Fed and Treasury
officials have identified the disease. It's called de-leveraging, or
the unwinding of debt. During the credit boom, financial institutions
and American households took on too much debt." But let's not buy into a false equivalence of "financial
institutions" and those "American households" borrowing beyond their
As the Supreme Court marches to the Right, corporate interests continue
to thrive at the expense of state regulatory powers. "This has been a
very successful year for the business community," said Miguel Estrada,
a Washington appellate lawyer who represents many key corporate
interests before courts in Washington, D.C." This session at the U.S.
Supreme Court, as this Dispatch will highlight, had an almost
uniform tilt towards business versus state regulatory authority. In
other areas like election law, the tilt was against poor voters who
faced restrictions on their right to vote, though the term was a more
mixed bag on criminal justice and other issues before the Court.
While the financial crisis developed over a number of years in the
subprime mortgage sector, federal regulators were asleep at the wheel
as greedy lenders often took advantage of working families. Worse,
when states tried to step in with new state policies to tighten
oversight of predatory lenders, federal officials blocked those state consumer protections, making the effects of the meltdown even worse for families.
In one more example of lax federal agencies being empowered to block
tougher state protection of consumers, the Supreme Court ruled
yesterday that states are barred from protecting consumers from faulty
medical devices, such as breast implants, if the Federal Food and Drug
Administration (FDA) has already approved those devices.
Conventional wisdom inside the D.C. Beltway holds that on major issues like
health care or energy independence, it's fine for state legislators to play
with their legislative toys in local sandboxes, but that it's really up to the
"grown-ups" in the federal government to fix big problems. In national policy
debates, state governments are usually treated as a tiny sideshow to the top
billing of national legislation.
State governments offer businesses tens of billions in tax incentives
each year to invest in their states-- corporate subsidies that many
advocates see as wasteful giveways but that others see as a lifeline for their communities.
North Carolina was the first state to pass a law reining in shady
predatory lending practices, such as steep prepayment penalties,
balloon payments and the sale of high-cost loans to borrowers who could
qualify for lower rates. Soon a number of other states followed with
similar laws and the result, according to a new study, is that homeowners now save $9.1 billion per year.