Author Lynne Weikart puts a human face on each of New York City’s fiscal crises, analyzes their historical patterns, and compares the tenure of several mayors. This timely book, Follow the Money: Who Controls New York City Mayors, has become an invaluable book for those interested in the future of American cities at a time of the nation’s severe financial crisis.

Through the history of politics, Weikart reveals how financial elites in New York City have exploited recurring fiscal crises and sharply curtailed the range of choices open to mayors in setting priorities and implementing fiscal policy.  In the face of enormous pressure during a fiscal crisis to defer programs and compromise promises to constituents, however, committed mayors from Fiorello LaGuardia to Michael Bloomberg have at times managed to overcome obstacles and achieve progressive goals. 

Weikart concludes: “As the world center of financial services, New York City is an informative case study of the power that financial elites exert over the political leadership and how mayors can push back to assert their own political agendas. In the final analysis, although some mayors do achieve their own policy initiatives, their choices are significantly limited by these powers of the financial interests particularly during times of fiscal crisis.”

This book is available through SUNY Press.

For more information:  http://www.followthemoneyus.com

To Purchase this book goto: Amazon Books

I bet you have never heard of the Depository Institutions Deregulatory and Monetary Control Act of 1980 (DIDMCA) or the Garn-St. Germain act of 1982. Those acts, one signed by President Carter and the other signed by President Reagan, helped create the financial mess in which we find ourselves.

The DIDMCA effectively ended all the states usury laws. It meant that if a state decided that interest rates on mortgages and credit cards should be capped at 5%, that state was stopped from doing so.  The Garn-St. Germain Act permitted a “shadow banking system” to develop without any of the regulations required of banks.  In effect the Garn-St.Germain Act cut the savings and loan institutions loose from any regulation.

There are other Congressional acts as the financial elites slowly carved their way out of Glass-Steagall Act of the Great Depression (which required commercial and investment banks to be separate and required insurance and brokerage houses to be separate) until banking regulation disappeared.  What a country!

There are solutions for the credit crunch that too few policymakers are talking about. Here is the list:

Short term: Federally insure subprime mortgages, restructure troubled mortgages, extend unemployment insurance benefits, provide funding to state governments for infrastructure.

Long term: Limit subprime mortgages or outlaw them, require transparency in all mortgage dealings, pass legislation regulating financial markets to prevent highly leveraged deals, stop predatory lending.

So when are we going to see such solutions debated in Congress. Don’t hold your breath. Solutions offered by our federal government so far rescue financial markets but not people. If it weren’t for Gordon Brown of Britain, we would not even be talking about the federal government buying prepared stocks in banks. Buying stocks in banks may be beneficial to the taxpayer, we might even make money on it.

Eliot Spitzer was a dynamite Attorney General. He wrote a column in the Washington Post on February 14, 2008 (see http://www.washingtonpost.com/wp-dyn/content/article/

2008/02/13/AR2008021302783.html in which he said that “In 2003, during the height of the predatory lending crisis, the OCC (office of the Controller of the Currency) [under the direction of President Bush] invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.”

The states attempted to stop predatory lending and the Bush administration stopped them. After all, we don’t want states to over regulate. When this sorry tale of taking advantage of the poorest of our citizens is told, the Bush administration will once again be demonstrated to be a disaster. Meanwhile good government groups try to get this administration to focus on people rather than financial markets. It is an uphill battle.

We made a choice. We voted for Obama and get a rational, thoughtful, educated politician who believes in federal regulation to deal with this crisis instead of McCain, an emotional, impulsive, politician who believes in less government. But Obama has to deliver and so far when dealing with the financial crisis, he is listening to the same people who created it.

Students are now paying outrageous amounts to pay off their private college loans. Unlike federal loans, which are limited to 6.8%, loans from private banks can have interest rates in excess of 20%.  Graduating college students faced with a bleak job market are at a loss as to how to repay thousands of dollars in tuition debt.  And students have no recourse to repayment.  Unlike other loans for housing or cars, college debt cannot be forgiven in bankruptcy.  If students cannot get a decent job and keep up their payments, they are faced with a mountain of debt that keeps growing because of high interest rates their entire lives. Students have reported in Congressional hearings of owing hundreds of thousands of dollars because of late fees and interest.Because Congress is lobbied intensely by banking interests, there are few Congresspeople interested in the problem of mounting student debt.  Two senators who were willing, Senators Kennedy and Clinton, are no longer advocating for helping people who have been scammed by the private loan scandal. With mounting evidence from consumer groups (such as www.studentloanjustice.org and the new America Foundation, www.newamerica.net), we need other senators to stand up for the ordinary citizen and not surcome to lobbyists.